GIVEAWAY

n NORTON 360 n HP OFFICEJET PRO 8600

FEATURE
n SUSTAINABILITY & ENERGY n A NEW AGENCY MODEL? n SHAPE UP YOUR MARKS! n TELEMATICS FOR SAFETY n ZEBRA & GIRAFFE WISDOM
June/July 2013 Vol. 18 No.3 R42.00 (incl. VAT)

TRAVEL & LEISURE

HIDDEN VALLEY n UNDER AFRICAS MILKY WAY n
Other African Countries R36.85 (excl.tax)

June/July 2013

BusinessBrief

CONTENTS
REGULAR SECTIONS
MANAGEMENT nZ  EBRA & GIRAFFE WISDOM n OUTSOURCING SHOULDNT MEAN OFFSHORING LEGAL nS  HAPE UP YOUR MARKS! nE  LECTRONIC LITIGATION AGE COMETH TAX 42 n A NEW START n TRUST REFORM FINANCE & EQUITY n MANAGERS FIDUCIARY RESPONSIBILITIES  N ATTRACTIVELY DISGUISED THREAT nA ASSETS & INVESTMENTS n AFRICA OPEN FOR BUSINESS n PRESERVATION VS PENSION FUNDS 50 46 37 16 BANKING & INSURANCE n BANKS REMAIN RESILIENT n TELEMATICS FOR SAFETY MARKETING & SELLING n DO NOT EMBELLISH! n A NEW AGENCY MODEL? HUMAN CAPITAL nP  RESENTEEISM? n LIMITING THE RIGHT TO STRIKE INFORMATION TECHNOLOGY n DATA SECURITY COMPLIANCE n STEPS TO IT GOVERNANCE PROCESS & OPERATIONS n ATTRACTING MILLENNIALS n ADDING PERFORMANCE TO STRUCTURES 69 64 60 55

73

FEATURE
SUSTAINABILITY & ENERGY: RENEWABLE RENAISSANCE 22

OTHER SECTIONS
BRIEFCASE nA  LL THE LATEST GADGETS, GIZMOS AND OFFICE MUST-HAVES GIVEAWAY n HP OFFICEJET PRO 8600 n NORTON 360 TRAVEL & LEISURE n WHAT & WHERE...WITH STYLE! 8 6 4 VIEWPOINT 14 n REDBACK: THE NEW SUPER CURRENCY? n

 U  NDERSTANDING AFRICA

SEMINARS & CONFERENCES n ALL THE LATEST EVENTS

79

CONTRIBUTORS 80 nC  ONSULT OUR CONTRIBUTORS DIRECTLY FOR PROFESSIONAL ADVICE

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BusinessBrief

June/July 2013

EDITORS NOTE
ho will be the voice of reason in these strange times? Traditionally, weve looked to scientists and philosophers. continuously in small incremental steps. The physics of the planet says that nothing is static; we have to adapt with it or suffer the consequences. SA has entered into agreements with other nations to curb global warming that will change our lives, one way or another. Leaders need to take cognisance and institute behavioural and structural changes that will make their businesses run more efficiently. We need to develop resilience to change, which is what Louise Theunissen discusses in her article Operational Resilience. The word revolution has a ring of violence to it that is disagreeable. What we need is a renaissance that will awaken our senses to the endless positive possibilities that we can take advantage of. Our feature on Sustainability and Energy focuses on what is being done in SA already and what can still be done. With wave upon wave of new technology, a palpable tsunami of ingenuity is flooding the market SA will be able to leapfrog ahead, garnering much needed know-how from those whove been doing it for years. Of course, it would be great if innovation was local. However, we are forced to dance to the tune of bigger players. One such player is China; its growth has been tremendous and it is beginning to flex its currency muscles. Our cover story explores the rise of the renminbi and asks whether your business is preparing to take advantage of the inevitable changes. Strike season is upon us and we do not want a repeat of last year, but many fear the worst. An amendment to the Labour Relations Act is on the cards. The article Limiting the right to strike deliberates the changes being proposed and whether they may subdue further wildcats from unsheathing their claws. The answers that we seek are readily available. We should turn to rational and creative thought leaders who believe in putting communities and the environment ahead of their own needs. Graham Pirie calls for leaders with a strong ethical quotient in his article An ethical balance. Ethical leadership is desperately required if we are to negotiate valuable compromises between opposing alternatives without compromising our future requirements. Lets intensify the dialogue because every action has a consequence and the more we communicate what we want to see in the world the more likely it is to happen. Enjoy the edition!

But, now there are all manner of relevant and wise thinkers who are at each others throats, trying to overcome one anothers points of view with words or war. Isnt it any wonder that, in a globalised world where brothers are killing brothers, as nations we cannot agree? In the confusing chaos of sustainable energy, who can we turn to for the answers? These arguments are ones of power for who controls what. South Africas energy requirements are closely aligned to power struggles dominated by many spheres of influence. Committing to collaborate with one another can bring consensus, which is vital if we are to build a prosperous nation. Whether we like it or not, our worlds climate has been changing

Nicholas

June/July 2013

BusinessBrief

PUBLISHERS NOTE
THE TEAM
PUBLISHER James Scott james@bbrief.co.za EDITOR Nicholas Harland editor@bbrief.co.za TECHNOLOGY & GADGETS Steven Ambrose steven@strategyworx.co.za Tel: 083 601 0333 OFFICE MANAGER/ SUBSCRIPTIONS Jenny Horsman admin@bbrief.co.za PRINTED BY United Litho (JHB) Tel: (011) 402 0571 ADVERTISING SALES James Scott james@bbrief.co.za Janine Levy janine@bbrief.co.za DESIGN & LAYOUT Bryan Maron Design Bandits bryan@designbandits.co.za Tel: 083 460 3633 COVER DESIGN & CONCEPT James Scott Bryan Maron CONTRIBUTORS Please see our contributors list on page 80

PUBLISHING POLICY

@bbrief1

EDITORIAL: Articles are published at the editors discretion, and are not linked to the payment of any consideration or to any obligation to place advertising. ADVERTORIAL: Published for a consideration, this material is provided by the client and does not necessarily reflect the views of the publication. It includes profiles, features, white papers, case studies, and thought leadership pieces. SPONSORED EDITORIAL: Written by an independent journalist, this material is published for a consideration, and includes profiles, features, white papers, case studies, and thought leadership pieces. Editorial contributions are welcome, but the publisher cannot accept responsibility for unsolicited material. The editor reserves the right to alter or cut copy. Copyright: BusinessBrief Publishing (Pty) Ltd. All rights reserved. Requests to lift material should be made to the editor. While every effort has been made by the publisher to ensure the accuracy of the information contained herein, the publisher and its agents cannot be held responsible for any errors, or loss incurred as a result. The publisher advises that readers consult their financial and professional consultants before acting on any information. All material used has been submitted with the understanding that it is original, and the publisher accepts no responsibility for any misrepresentation in this regard. No consideration is accepted for any editorial published. Published articles are not linked to the placement of any advertising.

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BusinessBrief

June/July 2013

BRIEFCASE

Dollars to Soweto
Dollars to Soweto is the story of an exceptional South African entrepreneur providing alternative health services to the communities of South Africa. Author and business woman Thabang Molefi received her international diploma in anatomy, physiology, nutrition and diet, reflexology, aromatherapy and massage in Johannesburg and was selected as one the most outstanding students and sent to London for further training. She then worked for Steiner Leisure cruise liners as an ionithermie therapist and department manager for five years. When she returned to South Africa in 2002 Thabang opened the first wellness centre The Roots Healthcare Centre in Soweto. The business has grown exponentially and is recognised as a national health care centre attributed to the quality of her service and satisfied customers. Branches have been opened all over the country and have extended to the rural areas where she has introduced community mobile units. Available at all good bookshops. For further enquires contact AG Distribution 011 740 4958

Change Anything
By the leaders of VitalSmarts, Kerry Patterson, Joseph Grenny, David Maxfield, Ron McMillan and Al Switzler Is willpower overrated? Most people blame lack of willpower for their inability to change a bad habit. But it turns out willpower has surprisingly little to do with whether or not people succeed at changing their bad habits finds Change Anything: The New Science Of Personal Success, a book based on psychological and medical research and a study of more than 5,000 everyday people. When it comes to kicking bad habits, the three-time New York Times bestselling authors prove that we have far less control over our behaviour than we think we do. Thats because our behaviour is governed by outside influences that make us susceptible to bad habits. Change Anything is a guide to breaking bad habits and highlights real changers journeys and guides readers on how to make better decisions, change their outlook and replace bad habits with good ones. Available at good bookstores or from TBotha@humanedge.co.za

Managing to Lead
Managing to Lead is a handbook designed to help leadership and management teams meet their organisations objectives. It is aimed at management as leaders and champions of change. The book includes theoretical and practical worksheets designed to strengthen the required skills. In the mix are several suggestions, ideas and tools to dealing with different situations. This is not an attempt to teach fish how to swim we know that many managers will be familiar with, and have, the skills, however, we also know that some fish dont swim as well as others, and so some managers may need to strengthen existing skills, or learn new ones. And even the stronger swimmers can benefit from better routes and favourable currents! The handbook is interactive and the reader is required to participate in full. It is not a text book that can be read from beginning to end it is a tool that develops the readers ability to manage, change and deliver excellent customer service. Available at all good bookshops. For further enquires contact AG Distribution 011 740 4958

June/July 2013

BusinessBrief

BRIEFCASE

Blackberry Q10
Keyboard, meet touchscreen. The only high end keyboard equipped smartphone on the market. The Blackberry Q10 is the answer to your business and personal mobile needs. TheQ10 has an outstanding hardware keyboard with Blackberry Balance, giving it the ability to switch from a completely secure business mode, using Blackberry Enterprise Server 10, to a personal mode, with all the apps music and games you would want. Your CIO will love this. BBM is standard and an ever growing app store with 120 000 apps rounds out the package. Available from all the networks. More details on www.blackberry.co.za

Fujifim X-E1
There are occasions when your mobile phone camera just wont do; Fujifilm X-E1 makes a compact camera that is perfect for ultrahigh quality still pictures on the move. The Fujifilm is an award winning photographers dream camera, which is compact, extremely solid and has all the cutting edge features you would need. The Fujifilm X-E1 features a 16 Megapixel advanced sensor and up to 10 interchangeable lenses to suite any requirement. The X-E1 has a cool retro look in silver or black and can also be used for full HD movie recording. Travelling with the X-E1 can make anyone a creative photographer. Available from all good camera shops. For more information: www.fujifilm.com/products/digital_cameras/x/fujifilm_x_e1/

Dell Latitude 10.1. Tablet

Tablets are all the rage right now and often a business class solution is needed. If you want full Windows functionality along with tablet style convenience and form factor, look no further than the Dell Latitude 10.1. Running full Windows 8, along with traditional Dell customisability, Intel processors, docking stations, and connectivity, the Dell Latitude 10.1. will give you full business productivity. The Dell Latitude 10.1. also features a removable battery so staying powered on the road is far easier. The build quality is impressive and the actual performance is fast and fluid. For more information: www.dell.com/za/p/latitude-10-tablet/pd

BusinessBrief

June/July 2013

BRIEFCASE

GIVEAWAY

HP Officejet Pro 8600

The HP Officejet Pro 8600 e-All-in-One offers high quality and low cost printing. Professional-quality colour printing for up to 50% lower cost per page than lasers. Print using the touchscreen, via your wireless network or direct from mobile devices with HP ePrint. The HP Officejet Pro 8600 e-All-in-One is designed for micro/small business users wanting low cost, premium-quality colour from a webconnected all-in-one with mobile printing and network options and a range of productivity features.

Norton 360

Viruses and identity thieves are commonplace online and protecting your PC is vital. Norton 360 by Symantec keeps trespassers out with Browser Protection and even removes the most stubborn viruses with its powerful threat removal layer. Norton 360 provides proactive protection, offers free 24/7 support and is also compatible with Windows 7, Windows 8, XP and Vista. BusinessBrief and Drive Control Corporation are giving away three Norton Anti-Virus Software licenses.

GIVEAWAY
For a chance to receive the new HP Officejet Pro 8600 or a Norton 360, please send an email or postcard (one entry per person) with your name, physical address and telephone number

marked HP/BusinessBrief Giveaway or Norton/BusinessBrief Giveaway. Please note that this giveaway is only open to our South African readers.

Postcard: P.O. Box 1546, Parklands, 2121 Closing date: Wednesday, 17 July 2013 Congratulations to last edtions entrant: Simon Holdcroft of Tokai, Cape Town Blackberry Z10

Email: editor@bbrief.co.za

June/July 2013

BusinessBrief

BRIEFCASE

De Riguour Standing Lamp

The De Riguours bilingual style elegantly unifies the organic and the geometric worlds establishing an aesthetic new order. Materials: powder coated mild steel base available in black or white with a cotton shade & floor dimmer control. Dimensions: 3000w x 650d x 2100h (mm) incl. shade. For more information regarding prices & purchasing info please contact the OKHA Showroom or visit our website. OKHA Interiors / Tel. 021 461 7233 / www.okha.com

The Cosmo Chair

Designed by Nthabi Taukobong, the Cosmo Chair is from the sexy Pink Label Penthouse Collection at JVB. Designed with the idea of hassle free living, its a must-have for any up and coming executive. The clean lines and floating seat add a touch of sophistication to this beautiful chair. www.j-v-b.co.za / 011262 4118 / info@j-v-b.co.za / 8 Desmond Street, Kramerville, Sandton. OKHA Interiors / Tel. 021 461 7233 / www.okha.com

Paper Table
Paper Table by Nathan Yong is a charming occasional table cum magazine rack, made from white lacquered steel. Paper Tables leaves are the size of an A4 sheet of paper, and resemble paper even more so thanks to their edges which curl up. These surfaces pivot around the central stem, enabling random configurations. First shown at the Milan fair in April 2010, Paper Table aroused much interest among the visitors. Available to order from ligne roset Johannesburg, 011 706 9961 / info@ligne-roset.co.za / www.ligne-roset.com

BusinessBrief

June/July 2013

TRAVEL & LEISURE

Under Africas MILKY way

ith the hustle and bustle of modern life creating a mountain of responsibilities on a daily basis, its no wonder that peoples stress levels have been pushed beyond breaking point, and that travellers habitual desire to get away to a new destination emerges.

The lodge, situated on the western boundary of the Kruger National Park, is the ultimate safari experience that welcomes natures symphony. Owing to the areas minimal vehicle density, guests are ensured of a peaceful, exclusive, and uniquely rewarding safari experience. From the lodges six exclusive nineteenth-century explorer themed suites, guests have a suitably comfortable and secluded area from which to gaze at the unparalleled birdlife present in the reserve. Guests can look forward to being treated like royalty, with a private safari vehicle, guide and tracker, as well as a personal chef and butler at their service.

If this craving is all too common and the need to journey to somewhere new and exciting has surfaced, the serenity of Tintswalo Safari Lodge awaits its guests arrival. Tucked away exclusively within the concession of the pristine Manyeleti Reserves 64 800 acres, Safari Lodge is a lavish and private sanctuary in which to experience the sights and sounds of Africas Big Five, as well as the spectacular bird life.

So you inherited Uncle Edmonds eyesight, ears and his old Rolex.

The blistering heat of the African sun is no match for the protective, cool air conditioning that each room provides, complemented by overhead fans gently cooling the rooms; mosquito nets keep away unwanted insect visitors, and any possible stresses are swiftly attended to by a Tintswalo staff member. Comfort levels are taken to even greater heights by an ensuite bathroom, an indoor and outdoor shower that leads off from the spacious bathroom and opens out onto the deck, as well as supremely comfortable extra length double or twin beds that will make any guest feel suitably rested under Africas Milky Way. A distinctive delight also awaits guests as the lodge overlooks a waterhole that is frequented by large herds of elephant and other wildlife. Unwind from the vantage point of a private plunge pool and deck, and observe the large variety of animals that visit the seasonal river bed, as well as the magnificent sycamore groves in bloom. Tintswalos professional and knowledgeable rangers provide valuable information relating to the local wildlife, their natural playground, and insight into the local Shangaan traditions. For guests who enjoy the occasional adrenalin rush accompanied by pure beauty, hot-air ballooning is an unforgettable experience that provides awe-inspiring views of the natural fauna and flora of the Kruger National Park. One of the most satisfying aspects of staying at the Tintswalo Safari Lodge is that the schedule can be arranged according to guests particular needs. As such, visitors get to decide when they would like to take in the early morning game viewing, revel in a scrumptious breakfast in the bush, or delight in al fresco dining or high tea at the lodge. Tintswalo in the Shangaan language means the intangible feeling of love, gratitude and peace that is bestowed upon someone who has given a meaningful and worthy gift. Once guests have indulged in the luxurious and stress-relieving stay at the Tintswalo Safari Lodge, they will certainly understand the meaning a lot better, and will never view a safari holiday in quite the same way again. For more information, call Tintswalo Reservations on 011 300 8888, email Lizaan Bosman on res1@tintswalo.com or Chantell Doravaloo on res2@tintswalo.com or visit www.tintswalo.com/safari n

We cant help you with the first two but the Rolex we can work with

Looking for a timeless classic?

Peter Machlup Fine Wristwatches and Diamond Trading International Dealers in: Patek Phillipe, Rolex, Cartier, Breitling, Jaeger Le Coultre, IWC, A Lange & Sohn.
1st Floor Melrose Arch, 10 Melrose Boulevard, Melrose North 011 684 1222 www.petermachlup.com
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BusinessBrief

June/July 2013

10

TRAVEL & LEISURE

Hidden Valley
Our History Hidden Valley was born out of decades of patience and determination. After being informed by a professor of viticulture that the best vineyard soil lies on the slopes of the Helderberg in Stellenbosch, Dave Hidden, winemaker by training, entrepreneur by nature, set his mind to owning and running a wine farm. Thirty years later and the result is Hidden Valley which is situated on the very slopes he always dreamt of. Thriving in ancient, fertile granite soils combined with the altitude and a strict regime of working in accordance with nature, the vineyards of Hidden Valley are responsible for delivering some of the finest hand-crafted wines to your palate and for your enjoyment. The Farm The farm, a member of the Biodiversity and Wine Initiative, is run by a philosophy of living in accordance with nature. The winery is a state of the art, gravity fed cellar built from stone, wood and glass all purposely selected to present a contemporary yet functional structure. The cellar is surrounded by vineyards, almond orchards and fynbos gardens, each occupying an integral part of the farms ecosystem. Hidden Valley is also home to over 4000 olive trees whose fruit produces award winning oil, table olives and tapenade of very high quality. Tasting Centre Hidden Valleys tasting centre is open seven days a week and provides a relaxed and picturesque setting during both the winter and summer months. Marvel in all that nature has to offer courtesy of the 180 degree views from our terrace accompanied by a glass of Hidden Valley Sauvignon Blanc and a delicious cheese platter, or simply relax with a glass of Hidden Valleys signature red wine whilst nestled in a comfy

armchair by our log fire. Landscaped nature trails can be found throughout the farm and are best enjoyed when accompanied by a Hidden Valley picnic basket filled with tasty snacks and some wine to keep your thirst at bay. Restaurant Overture, one of the top fine dining experiences in the country and consecutive winner of Top 10 restaurants in South Africa, is the onsite restaurant at Hidden Valley. Chef Bertus Basson and his professional team focus on using quality, local and seasonal ingredients mirroring the farms holistic approach to living in accordance with nature. The menu, which highlights delicious flavour combinations, changes on a weekly basis. Weddings Celebrate your special day in style at Hidden Valley. Our panoramic views, traditional wine cellar and top class eating area make for superb photographic opportunities on your big day. Your wedding menu will be created

by award-winning master chef Bertus Basson, and prepared in the Overture restaurant. We cater to groups as large as 130, all who will fit nicely within the space of a Bedouin tent beside the dam or the barrel cellar inside. The colours in the restaurant are neutral enough to allow any colour scheme, without seeming washed out. For more information, visit www.hiddenvalleywines.com or call 021 880 2646 or email: info@hiddenvalleywines.co.za n

The DECIDING factor?

ot long ago free Wi-Fi was an extra benefit offered by a handful of restaurants and hotels looking to lure new business customers. However, as more and more consumers have become reliant on access given the proliferation of smartphones and tablets, Wi-Fi has been not just a nice to have, but a deciding factor for many looking for a restaurant or hotel.

The benchmark of prestige, yet affordable travel

Interesting enough, during a search for Wi-Fi hotspots, business people frequently find themselves scheduling meetings in restaurants and or hotel lobbies where they know they can find Wi-Fi access. It has become a non-negotiable issue. Wireless is no longer just another amenity at hotels. Its like having running hot water a requirement and a prerequisite for doing business period. Many people frequent hotels across the country for business and require access. The easiest and simplest method is Wi-Fi, and with hotels aiming to increase Revenues Per Available Room (RevPAR) and maximise profitability, they are jumping on the wireless bandwagon and its easy to see why. Some hotels charge for Wi-Fi per device, others offer it free; some chain hotels offer free Wi-Fi at their budget brands but charge for it at their luxury ones. With no set rules, the customer never knows what to expect and until some rules of engagement are identified and agreed upon, you are going to find that the hotels that offer free Wi-Fi are going to come out ahead of the pack. Places that offer Wi-Fi as a service to their customers see an increase in revenue. When people look for hotels, they ultimately identify their top three or four choices and a major swaying factor is the Wi-Fi facility that the hotel provides. As the demand for Wi-Fi connectivity increases in light of a more mobile consumer it is imperative to be at the forefront of innovative Wi-Fi solutions for the hospitality industry. n By Michael Fletcher Sales Director Ruckus Wireless sub-Saharan Africa michael.fletcher@ruckuswireless.com
@RuckusAfrica

Avis selection of luxury self drive and chauffeur driven services, provide a wide array of functions ranging from business to leisure, from special occasion luxury to regular service, for a day or for months on end. Luxury customers, both companies and individuals, can enjoy a chauffeur driven journey or a bit of self-indulgence should they choose to. A wide range of vehicles cater to the ultimate luxury experience.

Visit www.avis.co.za or call 0861 021 111

Avis rents VW and other fine cars

BusinessBrief

June/July 2013

12

TRAVEL & LEISURE

LUXURY in harmony with Nature

hen world-renowned British conservationist David Bellamy says The best example of conservation of biodiversity I have ever seen Grootbos says it with flowers, then one knows that one has discovered a truly exceptional nature destination.

many secrets and developed a suite of projects focused on conserving this exceptional natural region. The gourmet cuisine is crafted from the finest and freshest local ingredients, including seafood specialties and excellent South African wines. One can experience a fusion of culinary delights while marvelling at mesmerizing views of Walker Bay. Accommodation is in spacious luxury suites, all with sweeping views across the dunes and ocean, private wooden decks, bathrooms, finest bedding and separate living rooms with cosy fireplaces.

From the beginning, the owners of Grootbos have been committed to the conservation of the regions biodiversity as well as the upliftment of local communities. The non-profit Grootbos Foundation was established during 2004 to run the Grootbos environmental and social development program. At Grootbos you will feel welcomed to a truly unique place where conservation, social responsibility, luxury and relaxation have found the perfect home. For more information, call Grootbos Private Nature Reserve on 028 384 8000, email info@grootbos.co.za, or visit www.grootbos.com n

Situated less than two hours from Cape Town and overlooking the spectacular Walker Bay, Grootbos encapsulates not only brilliant service, warm hospitality, utter luxury, excellent cuisine and fine South African wines but also a unique environment of conservation and human development. Protecting 2 500 hectares of unique Cape Floral Kingdom, with over 750 species of indigenous flowering plants, a walk, horse ride or 4x4 drive through Grootbos Nature Reserve offers young and old an introduction to natures more subtle nuances. Situated along South Africas Whale Coast, Grootbos is famous for its wonderful land-based whale watching opportunities. Whale watching in Grootbos is different to most spots along this coastline because the mothers and calves come within 30m of the shore, providing an unparalleled view of one of the oceans most majestic creatures. Gansbaai plays host to these playful animals from June to December when mothers and bulls venture closer to the shore to mate and to calve. Besides the incredible whale watching by boat, land or sea Grootbos has many other activities to offer. Whether ones interests are birding, wild flowers, diving with great white sharks or relaxing on unspoilt beaches, Grootbos has it all. The Cape fynbos is renowned as a flora biodiversity hotspot and for more than a decade Grootbos has promoted its beauty, researched some of its

lead in life
You hold the keys to the success of your life.
At Unisa SBL we believe that within every person lies the ability to be a leader. That is why we offer affordable, quality education to enable you to reach greater heights.
Visit www.sblunisa.ac.za for more information on the following offers: Executive Development Programmes Management Development Programmes Project Management Programmes or simply contact us to discuss customised training and development. Unisa Graduate School of Business Leadership (SBL) Cnr Janadel & Alexander Avenue, Midrand 1685 Tel: +27 11 652 0248/0000 Fax: +27 11 652 0299 E-mail: sbl@unisa.ac.za
GRADUATE SCHOOL OF BUSINESS LEADERSHIP

First in Leadership Education in Africa

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BusinessBrief

June/July 2013

14

VIEWPOINT

REDBACK: The New SUPER Currency?

he rise of a countrys economic power is usually matched by the international acceptance of its currency the British pound dominated the nineteenth century, the US dollar dominated the twentieth. Yet, until four years ago Chinas currency, the renminbi (or RMB) as it is formally known had virtually no exposure in the international markets. Yuan refers to a unit of the renminbi currency something may cost 10 Yuan, not 10 renminbi. Strict controls prohibited almost all export of the currency and its use in cross-border transactions. Payments between Chinese companies and their foreign partners were usually conducted in dollars or euros. Even though China has experienced a rapidly growing international economic presence, for the most part, the peoples currency stayed within the Peoples Republic, not often leaving its borders. However, in 2009, this began to change a series of reforms were set in motion in order to increase the use of renminbi in cross-border trade settlement and enhance investment flows. The resultant effect has been transformative taking the renminbi from a low base, to rapidly becoming established on the international stage. Over 150 countries now do renminbi business in a typical month; weve seen the formation of a thriving offshore renminbi market, and the use of renminbi for cross-border transactions is growing rapidly. So much so, in fact, that data from SWIFT (a global provider of financial messaging services) suggests that renminbi payments grew in value by 171% from January 2012 to January 2013. Renminbi investment opportunities are being created around the world, supported by offshore markets, particularly the offshore bond market. But renminbi investment channels on the Chinese mainland have also been opening up. Greater foreign investment in the securities market is being enabled by the rise of the

renminbi. The new reforms made to the rules that govern capital flow are also allowing foreign business to invest or purchase businesses, and to build or buy factories and other facilities on the mainland. The amount of FDI into China has seen rapid growth in 2011, it was 12%, and in 2012, it had increased to an impressive 35%. As it stands currently and going forward, the renminbi is increasingly becoming part of normal day-today business for anyone trading with or investing in China. For businesses, the potential benefits of the renminbi come from three main areas: 1. F  irst is the opportunity to eliminate foreign exchange costs and risks. An HSBC survey found half of Chinese corporates were willing to offer discounts in return for using renminbi. 2. S  econd is the opportunity to take advantage of the different characteristics of the onshore and offshore markets. This can help companies lower their funding costs or select the best rate to do their foreign exchange transactions. 3. T  hird is the opportunity to build strong relationships with Chinese partners. By adopting the renminbi, you provide convenience for the Chinese counterparty and by doing so early, you could potentially create a competitive advantage, which could be vital in winning market share. The rise of the redback will continue in volume terms, the renminbi is expected to become a top three global trade currency as soon as 2015, and is expected to be fully convertible within five years. This will undoubtedly take Chinas financial integration with global markets to a new level. Businesses and investors around the world, and in Africa, should be considering what the renminbi means for them, and they should certainly be starting to get themselves renminbiready. n By Andrew Dell Chief Executive Officer HSBC Africa Isabel.correia@hsbc.com

We are fortunate that the greatest economic and geopolitical trend of our time the rise of China is surely beyond doubt. Over the past 30 years, China has evolved into the second largest economy in the world. It also holds the title of being the worlds largest exporter and the most popular destination for direct investment. Despite slower than expected growth figures for the first quarter of 2013, economists predict that China is set to become the worlds largest economy in the nottoo-distant future. So far, however, one part of the picture has been sorely missing: Chinas currency.

June/July 2013

BusinessBrief

VIEWPOINT

15

Understanding AFRICA
South Africas hosting of the BRICS summit in Durban brought more focus than ever on doing business in Africa.
here is an unprecedented level of interest from companies, both local and foreign, ranging in size from large multinationals down to the likes of a local fencing manufacturer, all seeking to capitalise on a largely untapped market of more than a billion people, many of whom are young, aspirant and living in rapidly urbanising areas. Fourteen months ago everyone was talking about the potential offered by doing business in Africa, but many were afraid to take the first steps. Theyd all heard some urban legends about corruption or someone being fleeced by their local partner. Today its a vastly different picture. Were working around the clock to keep up with the levels of requests for assistance. CEOs are telling us, We realise we werent the first, or even the fifth in our sector to expand into a particular African country. Were happy to be the seventh or eighth but we dont want to be the twentieth. One of the most common questions asked is about the best place to enter the African market. With 54 diverse markets to potentially choose from, theres no simple answer. Nigeria receives a huge amount of interest. With a population of some 170mn people and a fast growing middle class, Nigeria is highly attractive to those seeking access to a large consumer base in Africa. In addition, financial sector reforms and the fact that the government is cleaning up the petroleum industry have made Nigeria more attractive

to multinational companies who may have been cautious of doing business there in the past. Ghana is seen as a very real alternative to Nigeria by companies wanting to get into the broader West Africa market. The economy is also booming and it offers easy access to both Nigeria and other West African markets. The East Africa trade bloc, which includes Kenya, Tanzania and Uganda, Rwanda and Burundi, is also a popular choice. Theres a market of around 140mn people; education standards are high, and they have some excellent IT infrastructure and skills. Closer to home, Mozambique has experienced astonishing levels of investment and growth over the past 12 months, much of it fuelled by the discovery of vast offshore gas reserves. The capital, Maputo, is a very different city from what it was just a year ago. The city centre, once run-down, is now buzzing and there has been a huge influx of foreigners with money to spend and to invest. Accommodation is at an absolute premium and all of this is happening in the early days of the overall gas investment and associated economic life-cycle. Angola is another country with enormous potential, also thanks to its oil and gas resources. At the moment there are fewer South Africans doing business there compared to Mozambique, probably because its less of a known quantity, but this will change over the next five years. Its also quite a bit further away, while Mozambique is viewed by many as virtually another province of South

Africa in terms of doing business. Whichever country or countries a company decides on, local knowledge and expertise is essential. You simply cannot do these transactions remotely without in-depth local knowledge. It is strongly recommend that foreign companies opening up in African countries take on a trustworthy local partner or buy into an existing business. This may seem more complex; however, the advantages of local knowledge and connectivity can be critical. Contemplating a move into Africa can be a daunting prospect. But the potential rewards are now well understood and we are spoilt for successful proof points, but reparation and local knowledge are everything. n

By Anthony Thunstrm Chief Operating Officer KPMGs Global Africa Practice Anthony.thunstrom@kpmg.co.za
@KPMGAfrica

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ZEBRA & GIRAFFE Wisdom

We can learn a surprising amount from animals. Consider, for example, the collaborative relationship between the zebra and giraffe, and the lessons this holds for agile, fact-based decision-making.
By Davide Hanan Managing Director QlikView SA davideh@qlikview.co.za
@QlikView

he giraffe has great height and expansive vision, but it cannot obtain sensory input from the ground. The zebra on the other hand can smell advancing predators at the ground level and see them under trees, but cannot see danger from afar. Conscious of this, the animals forage together, doubly secure in their collaborative defence effort. At the first sight or smell of danger, one will bolt, causing the other to follow. By comparison, traditional corporate decision-making falls short in a number of respects. Firstly, corporates tend to make and drive decisions only from a giraffes perspective, i.e. from the top down. But companies are essentially two kinds of animals foraging together executives at the top as well as workers at the bottom and workers should have the ability to influence action based on their unique perspective of happenings on the ground. Secondly, since top-down decision-making is a fact of corporate life, companies often make decisions based on opinion rather than on fact. Management and executive committees essentially obtain consensus on what actions are appropriate, resulting in lengthy and sometimes imprecise decision-making cycles. But because the facts are not always visible from the top, the executive relies on people on the ground to relay the summary facts to them, to assemble even more summarised, high-level views. Research shows that most successful companies organise themselves in non-hierarchical ways and demonstrate other ways of ensuring participative decision-making. However, this success is not only dependent on fostering a culture of openness and collaboration, it is also dependent on the tools with which all workers use to analyse information and disseminate insights. Since knowledge is power, there is a strong relationship between a companys treatment of information and the level of empowerment felt among its workers. In the area of business analytics this means empowering workers with information. They must be given the tools to assess the state of affairs as relates to their area of the business, make the decisions based on the facts as appropriate to their level in the organisation, rather than on feeling, and communicate the findings to senior management. This will allow one version of the truth to permeate throughout the organisation, making decision-making less of an argument and more of a fact-based, foregone conclusion.

Unlike their savannah counterparts, corporate animals can change their ways although not, usually, without some digging in of heels. So how do we overcome the natural resistance to adopting a culture of distributed, fact-based decision-making? W  ith encouragement from the top, a culture prone to territorialism can turn to openness. A  willingness to take on responsibility at all levels of the organisation begins with giving people easy-to-use tools that let them discover the data they need to do their job and communicate answers up to senior management with effective collaboration and visualisation tools. Traditional BI tools do not allow this, as they are focused on reporting with inflexible predefined queries, and require serious skills to operate. F  ears about data security and integrity often hamper efforts to spread the power of analytics throughout the organisation. But people who object to that perhaps dont appreciate how widespread distribution and alteration of spreadsheet-based data is. It is important to note that business discovery tools using an app model dont allow changing of source data, only additions which, if incorrect, only affects that user. And unlike spreadsheets, apps are automatically updated when source data is updated or corrected via administrative intervention. In addition, the app model provides extra data protection in the form of rights-based access as well as other data security and integrity measures. When the penny drops, it will be clear that there is no going back from a fact-based decision-making culture in which a far greater percentage of the organisation shares. If information is power, getting rid of personal information fiefdoms by empowering a larger base of decision-makers will both allow better quality decisions and result in a more engaged work force, enjoying greater responsibility, clout and happiness in the workplace. n

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OUTSOURCING shouldnt mean offshoring

Outsourcing services enables enterprises to achieve optimum performance in areas where they have skills shortfalls, or in areas that are not their key focus. But outsourcing should not mean offshoring work.
oo many local enterprises elect to outsource work to service providers abroad, to the detriment of the local workforce and the local economy as a whole. Indeed, far too many multinationals across all verticals regard South Africa as a market only, and not as part of the global manufacturing and supply chain. This needs to change. Jobs need to be brought back to South Africa, not sent abroad. With millions of unemployed youth in the country, South Africa desperately needs the private sector to step in to help address the situation. By developing local competencies then rightshoring to local service providers when outsourcing i.e. placing business components and processes in locations that provide the best combination of cost and efficiency, businesses benefit and so does the local economy. Multinationals operating in South Africa need to establish centres for development in the country, bringing the same competencies and services available in areas like the Philippines and India to local soil. SA has the advantages of skills and ability, with language and time zone benefits, and it is reasonably situated logistically. The country has a good infrastructure, it is technologically advanced and it boasts among the best financial services in the world. SA has proven expertise in numerous sectors take, for example, the fact that a major automotive brands right hand drive vehicles are manufactured in SA for shipping to most right hand driving countries. Yet we see major multinationals from around the globe trading here, but regarding SA only as a market, and not an active participant in the supply chain. Any company trading in SA should consider manufacturing here too. SA needs to be made a partner in globalisation, and jobs need to be brought back from abroad. Our own programme to work with our customers and business partners in order to bring jobs back home coupled with our initiative to promote internship and learnership programs for young graduates and school leavers are proving remarkably beneficial not just for the young people, but for our own business, our industry sector, and the economy. Businesses operating in SA cannot think in the same way as their counterparts in more developed countries, where the responsibility is primarily to the shareholders. Here, business is obliged to play a greater role in the well-being of society and the growth of the economy. As such, they need to invest in developing competencies on South African soil, enabling the country to participate in the globalised economy. n By Asher Bohbot CEO of EOH abohbot@eoh.co.za

Compliance is simple!
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MANAGEMENT

BUSINESS is about trust s noisiced MROFSNAR T sall mroft alp gnidrao bhsaD
Who do you trust these daysgovernment, business leaders, sportsmen? All over the world, it has been proven that trust has fallen to alarmingly low levels. While people might well trust the institution of government, they dont trust government leaders and the main reason for this is corruption.
n 26 countries around the world excluding South Africa people dont trust CEOs. In fact, CEOs ranked second lowest after government leaders. Again excluding SA, where the evidence is quite different, the business sector that scores the lowest for trust is a sector in which we should have the most trust financial services. People all over the world do not trust the very institutions where they put their money. Thats chronic. In contrast, were lucky that regulations have almost forced a trust culture of financial services in SA.

The most enlightening revelation from research is that trust is not some elusive, intangible concept. Trust is a basic instinct that can be taught, established, built and restored. Trust is the one thing that holds every relationship together. Why is trust so important in business? When you have trust, you have benefits. According to Stephen Coveys book, The Speed of Trust, when there is trust in any business relationship, there is collaboration, transparency and loyalty. People recommend you; they place more orders and employees want to work for you. Relationships built on trust are based on commitment and everything speeds upand costs go down. The reverse applies when there is no trust. People are apathetic and frustrated. There is friction and politics; everything slows down resulting in costs going up. Today, people are realizing that we dont have to trust the same source; the same opinion formers; the same leaders. We can form our own opinions based on the shared experiences of like-minded people because it is relevant to us. In fact it has been proven that 93% of people trust people just like themselves; even more staggering, 70% of people now trust the word

of strangers more than anyone else. We get our news from strangers on Twitter. We accept advice from strangers on TripAdvisor about where to go on holiday. We use LinkedIn for recommendations on who to recruit. What this means for business is that leaders have to be more respectful and caring to their employees and to their customers. Today, it is more than just about the bottom line; it is also about how you achieve it in terms of your leadership skills and ethics. We live in a world thats social, sharing and transparent one that requires trust more than ever to function effectively. When it comes to brands, consumers are smart; they can tell if a brand is not authentic. Through careless messaging or just one tweet, a familiar brand can lose the trust it has built up over years. Results arent the only reason were in business; they also serve as a great motivator of trust. People want to work for and with people who have the competence and who can deliver. Nowadays, its also about how we get to those results that matter. Its about your intent, your integrity and how you treat your employees and customers. Trust is no longer nice to haveits an absolute imperative. n

By Ann Nurock SA Partner of Relationship Audits and Management annnurock@gmail.com

@annnurock

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An ETHICAL balance
By Graham Pirie CEO at CESA gspirie@cesa.co.za government plans to improve the quality of life of the people in the country. The world perception of South Africa with respect to business integrity and corruption is deteriorating at an alarming rate and it is demoralizing to the average person trying to earn an honest living. Corruption forces honest hard-working citizens to leave the country. Those who leave because of the demise of an honest and fair business environment are invariably the ones who are making a positive contribution to the economy at large. Businesses that were once loyal to SA also reconsider their options in this regard.

he announcement by the Cooperative Governance and Traditional Affairs Department, in its Municipal Systems Amendment Act, draft regulations that municipal managers could face a ban of up to 10 years, if they are found to have committed fraud, financial misconduct or corruption is long overdue and a step in the right direction. It is time to intensify the fight against corruption, because it is hampering service delivery and delaying

Strong action is required from all stakeholders to curb the scourge of white collar crime and we need the government to take the lead in this. As business we are committed to playing our part. All leaders, whether they are business leaders, political leaders or spiritual leaders, must be selected according to their ethical balance. Qualities such as IQ (intelligence quotient), EQ (emotional quotient) and PhQ (physical quotient) should be taken as given. A sustainable future depends on our ability to put leaders in place with the highest ethical balance or ethical quotient. n

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Operational resilience
Constant change is the hallmark of business today and business success depends on developing agile operations that can respond to change.
By Louise Theunissen Advisory Services at ContinuitySA louise.theunissen@continuitysa.co.za you start to ensure that your business keeps functioning during unforeseen circumstances? One important component of operational resilience is business continuity. It plays an important role in increasing an organisations capability to continue delivery of products and/or services at acceptable predefined levels and provide an effective response that safeguards the interest of stakeholders following a disruptive incident. The good news is that the International Standards Organisation (ISO) has recently introduced a set of standards for business continuity management. The new ISO 22301 standard specifies requirements for setting up and managing an effective Business Continuity Management System (BCMS). In other words, the new standard takes business continuity beyond risk management by providing processes for managing its implementation over the long term, and the measurement of its maturity. Usefully, the ISO has also produced guidelines in the companion standard, ISO 22313. Business continuity begins with developing a detailed understanding of your organisation, right down to the maximum tolerable period of disruption for each product or service offered. Thereafter, its possible to define a business continuity strategy based on how to bridge the gap between the companys business recovery requirements and its current recovery capabilities. Its then a question of implementing, managing (and monitoring) the strategy over time: business continuity management, in fact. This concept of managing the whole business continuity process is vital, particularly because it includes testing to see how effective the solution is. For this reason, companies will increasingly find that auditors are no longer satisfied with business continuity plans but are demanding proof that the solution has been tested and actions to address areas of weakness have been identified. As the organisations implementation of business continuity progresses, so will its resilience. n
USB133019E

heres much in business thats uncertain, but you can bank on one thing: you will go out of business if your operations cannot respond to unexpected change. That change could be anything from altered market conditions to unexpected catastrophe. Its also worth stating the obvious here: the world is now a very small place, thanks to our connected business models. In practical terms, changes at the other side of the world impact us here in South Africa when once they did not. Two examples will make that point. The Japanese earthquakes and consequent tsunamis in 2011 devastated the country, but they also affected electronic supply chains because factories manufacturing components were destroyed. And then consider Kenyas billions in wasted flowers and vegetables when the ash cloud from Icelands Eyjafjallajokull volcano grounded flights to Europe for more than a week in 2010. By contrast, the potential disruptions that the 2010 World Cup could have caused never materialised, thanks to good advance planning.

Companies need to develop organisational resilience to ensure agility in time of expected or unexpected change, from tsunamis to fluctuating exchange rates. Operational resilience covers a number of elements, but where do

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Academic & SOCIAL interactions

What kind of responsibility does a university have to its surrounding community? How does interaction take place between universities and with the society at large? And who benefits from the relationship?
By Professor Thandwa Mthembu Vice Chancellor and Principal of Central University of Technology dmaritz@cut.ac.za hen it comes to our relationships and working with society or communities, we see our role and responsibility as moulding, mentoring and educating students that are competent, caring, responsible and productive, and are well prepared for the workplace to help build the economy of South Africa. Our social responsibility is to provide a platform for the development of social and technological innovations for the benefit of the society at large. Therefore, our focus on community engagement should be to work closely with business and industry, government and community organisations to transfer our social and technological innovations that should, in turn, help solve our societal problems, not only for the benefit of this region, but also the rest of SA, Africa and beyond. In teaching and learning, the mandate of a university of technology is to produce graduates with high level intellectual and work-focused skills geared for the workplace. We therefore cannot operate in isolation from what the industry, business and government expects of our graduates. Our competencies in applied research in areas such as additive manufacturing, advanced product manufacturing, agriculture, and food safety can help us to come up with innovative ways to secure a sustainable food supply for the benefit of the region and improve the manufacturing capacity of the central region. In order to achieve these solutions, we have to work closely with the manufacturing and agricultural industries. The relationship between our universities and industries is critical to being innovative in knowledge transfer and, in turn, for the upliftment of our society at large. n

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RENEWABLE RENAISSANCE

Feature:
A renewable energy renaissance is underway and businesses would be wise to join in. Climate change is occurring and whether or not scientists agree on the cause, one thing is clear moving towards cleaner energy sources will improve the countrys energy policy and offer opportunities for growth.

SUSTAINABILITY & ENERGY

s the consequences of climate change are exacerbated, we will be hard pressed to change our ways. The age of excess that some sectors have grown used to will have to be mitigated by new policies that trim superfluous expenditure, making the entire systems more efficient. Making the energy sector more efficient is synonymous with being sustainable. Most industries define sustainable energy as the sustainable provision of energy that meets the needs of the present without compromising the needs of the future. As the earths stewards for the next generation, we are obliged to look after the interests of tomorrow. In order to meet the needs of the present without compromising the ability of future generations to meet theirs, we need a plan. Fortunately, there is one. South Africa supports the UN Secretary Generals Sustainable Energy for All campaign; the initiative is based on three pillars:

1. E  nsuring universal access to modern energy services 2. D  oubling the rate of improvement of energy efficiency 3. D  oubling the share of renewable energy in the global energy mix But, like with all good plans, success can only be achieved through successful implementation and, as history has shown, this is often where hiccups occur. Governments and the private sector have been challenged to work together to bring sustainable solutions to fruition the answers are readily available, its just about bringing them to market. At the opening address of the Power and

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SUSTAINABILITY & ENERGY

challenges, the plan is good as it lays a solid foundation for future energy requirements. From his office overlooking the solar panelled roofs of the carports, he says that coal is a reality and will be around a long time; however Eskom is preparing to diversify its portfolio of resources. This includes nuclear power, which will eventually account for producing about 23% of SAs energy. Nuclear energy is surrounded in controversy and fear but if done properly and with the latest technologies can be safe and clean. Peters says that we need to bring online 9600MW of nuclear power by 2030. SAs electricity demand cannot be met by green power generation technologies alone. However, Anton Eberhard, Professor at the University of Cape Towns Graduate School of Business and a member of the National Planning Commission disagrees and says that nuclear power is neither necessary nor cost effective alternative power sources are cheaper. He argues for a new and comprehensive power plan as the current one is out of date and many of its assumptions no longer apply. Additionally, global developments in the unconventional oil and gas industry have been revived, specifically because of shale oil. According to a PwC report, Shale oil the next energy revolution, lower global oil prices due to increased shale oil supply could have a major effect on the future evolution of the world economy by allowing more output to be produced at the same cost. Production of shale oil will likely have a negative impact on renewable energy plans. The financial investment for renewables becomes relatively less attractive under a lower oil price scenario. Chris Bredenhann, PwC Energy Leader, says that as a non-oil producing country, South African consumers stand to benefit from the anticipated lower oil prices contained in the study. However, is the case of renewable energy really all about price? Surely, the benefits of using renewables should outweigh the advantages of the continuing use of fossil fuels? A balancing act Its really about striking the right balance. All proposed projects, including renewables, attract opposition in one form or another,

Electricity World Africa Conference, the Minister of Energy, Ms Dipuo Peters reiterated South Africas commitment to renewable energy by implementing the renewable energy programme in accordance with the Integrated Resource Plan 2010-30. This policy document reveals SAs electricity generation aspirations over the next 20 years. Eskoms Group Executive in Sustainability, Dr Steve Lennon supports governments initiative and believes that, despite the

An Africa free of malaria is an Africa full of possibilities.

As one of the largest foreign investors in Africa, we know rsthand about the health and economic impact that malaria can have on a community and its workforce. Thats one of the reasons ExxonMobil is so committed to the ght against malaria. Huge progress has been made malaria deaths have decreased by 25 percent over the last decade but theres a lot more to do. And ExxonMobil is committed to doing our part. So whether its exploring for or producing new energy supplies, delivering innovative petroleum products or investing in communities, ExxonMobil is developing more than oil and gas we are helping to support Africas future. To learn more about our initiatives across Africa, please visit exxonmobil.com

The IDC is the biggest supporter of tenders awarded in the Department of Energys Renewable Energy Independent Power Producers (REIPP) programme.

Over the next five years, the IDC will make available R25 billion to fund projects related to green industries. The IDC is identifying and providing funding for many projects

In the first round of REIPP tenders, the IDC participated in twelve successful bids, and seven more in the second round. The green energy bids include wind power, concentrated solar power, photovoltaic and small hydro projects.

that will contribute to building South Africas industrial capacity and creating jobs. Visit www.idc.co.za to find out more.

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SUSTAINABILITY & ENERGY

but there is no escaping the fact that in order to meet all our future needs, we will need to adopt a hybrid approach one where all forms of energy production are embraced. The opportunities are wide open for bright and passionate people wanting to start a business in renewable energies. As the single buyer of the Renewable Energy Independent Power Producer Procurement (REIPPP) programme, which recently won the Green Infrastructure Project of the year award and which is allocated significant funding in order to reach a target of 3 725MW, Eskom is to begin receiving bids for the third phase of bidding on the 19th of August. 28 renewable energy projects (photovoltaic, concentrating solar power and wind) are already under way throughout SA at a cost of R47bn. SA is also going to be involved in 18 Strategic Integrated Projects (SIPS) throughout Africa. These high-impact infrastructure projects are aimed at supporting economic development and service delivery in the poorest areas. Peters emphasised that our energy needs in the SADC Region are interlinked and entwined; we will further our engagements with SADC counterparts on strengthening the Southern African Power Pool. We will also intensify our efforts aimed at the development of an Integrated Resource Plan for the region. The level of access to energy is an indication of a countrys economic development and SA is well positioned to alleviate poverty in Africa if it can effectively manage its relationships. Partners in the private sector should collaborate with government in finding amicable solutions. Addressing the brain

27

drain and skills shortages can be championed through a number of programmes, including but not limited to bursaries and scholarships for undergraduate and postgraduate energy related studies and international exchange programmes. These are exciting times indeed for the power producing and construction industries; a lot of money is going to be made. Lets just hope that proper management and governance procedures hold strong. Lets hope that all stakeholders are engaged and that there is value for the greater communities. The renewable renaissance under way should be remembered as a time when we joined together to improve our world. It should be about taking cognisance of our responsibilities noticing what impact were having on the planet and doing something to compensate.

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SUSTAINABILITY & ENERGY

first period of the tax (2013-2019). Further relief for trade exposed industries and process emissions will be allowed. The carbon credit system (carbon trading) was set up as a market mechanism to reduce the impacts of climate change through a penalty and incentive scheme. The initial and primary trading mechanism is the European Union Emissions Trading System (EU ETS) launched in 2005. It should be noted that this system has come under strain and is struggling to meet expectations. This is largely because too many carbon credits were allocated, driving the price down, thereby undermining the process. Through the EU ETS, the mechanism works on a cap and trade paradigm, whereby country signatories meeting specific criteria are obliged to reduce their emissions against a stated cap. While the EU battles its own economic hardships, advocates for action on climate change are going to have to look elsewhere for progress. Ben-Israel remarks that understanding that participants (companies) may not always be able to

Low-cost energy efficiency programs, while effective to meet short-term objectives, will no longer be enough. Companies must ask themselves how they can adapt their entire business to succeed in a world where carbon has become a scarce commodity. Carbon taxes The two main carbon policy instrument options used by governments are carbon taxes and emissions trading (or cap-and-trade) programmes, which give emitters the right to release greenhouse gas (GHG) emissions at a cost. A carbon tax is a fixed price levy on the carbon content of the use of fossil fuels, with the level determined by the authorities. By contrast, emissions trading programmes set a limit on the amount of carbon or GHG emissions installations can emit, allowing participants to trade allowances to cover their needs, with prices set by market dynamics. A carbon tax on direct emissions at a rate of R120 per ton of carbon dioxide equivalent (CO2e) is proposed. Paul Ben-Israel, Deloittes Leader for Sustainability notes that this is in line with the Climate Change Response White Paper approved by cabinet in 2011. A basic tax-free threshold of 60% will apply during the

BIOTEMP Reliability, Sustainability, Efficiency

1. Introduction Most oil filled transformers used in supplying power to plants, buildings and network applications are filled with mineral oil. This has been the technology since the late 1800s. However with escalations in power demand and aging network there is an increased failure of transformers. The limitations of using mineralbased dielectric fluid with the above increased demand and risk of failure are the combustibility and environmentally unfriendliness of mineral oils. BIOTEMP is a superior dielectric insulating fluid combining environmental friendliness, superior fire resistance and high temperature stability with excellent dielectric characteristics. BIOTEMP is a natural ester fluid made from renewable and biodegradable vegetablebased oil. 2. Customer benefits Environment - BIOTEMP is 99% biodegradable. Mineral oil is treated as toxic waste. How much will a major mineral oil spill clean-up cost you? How much would it cost you in revenue lost per day if you are not allowed to operate one of your substations due to environmental reasons? Safety - BIOTEMP has a 360C fire point as compared to mineral oils 180C. How much would you save in maintenance and rehabilitation costs if you dont need a deluge system and/or fire barriers? How much lower would your insurance premiums by reducing the risk of explosion and fire? Overload capacity - BIOTEMP allows higher hotspot temperature without reducing the insulation system lifetime thanks to its greater ability to hold moisture (10 times more than mineral oil) What would be the value to you of a 10% inherent increase in capacity of the transformer loading? What would happen to you capital budget if you gained 70% longer times for planned loading beyond nameplate? 3. Environmental benefits Renewable resource - BIOTEMP is completely derived from vegetable seed oil and is 100% renewable. Non genetically modified organism BIOTEMP is made out of 100% natural High Oleic Sunflower growing mainly in Europe and North America Biodegradability - BIOTEMP is readily biodegradable and is 99% biodegraded within 21 days. Non-toxic waste - BIOTEMP is nontoxic so spills can often be disposed of through normal means and not treaded as hazardous waste. BIOTEMP produces less and nontoxic fumes are produced during combustion Low-carbon footprint - Near neutral carbon footprint due to the negative carbon footprint of a vegetable-based oil production. 4. Economical benefits Reduced or delayed investment - Cellulose insulation lasts approximately four times longer in BIOTEMP than in mineral oil. This translates to longer replacement intervals. Delay in investment of additional new equipment could also result due to the overload ability of BIOTEMP filled transformers. Reduced maintenance cost BIOTEMP is designated lessflammable and thus certain installations do not require fire suppression systems or fire barriers. This provides savings in installation and maintenance of such systems. Higher revenues (overload ability and operational flexibility) BIOTEMP filled transformers has the ability to be overloaded and could mean higher revenues during peak demand periods without sacrificing transformer life. Reduced risk of environmental fines -BIOTEMP is 99% biodegradable and non-toxic and BIOTEMP spills are normally disposed through normal means.

Contact person: Wilma Muller Email: wilmam@wilec.co.za Tel: 011 629 9300

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to reduce the carbon intensity of their products. A comparison based on industry emissions will be used to either reduce or increase the tax-free threshold. Companies whose carbon intensity of products is higher than the industry standard will be penalised by reducing the 60% threshold. Likewise, companies whose carbon intensity of products is lower than the industry standard will receive a higher tax-free threshold, capped at 90%. A carbon tax at a rate of R120 per ton of CO2e is seen as modest per the budget documents. It is hoped that a carbon tax will place a price on emissions and will be incorporated into production cost and consumer prices. Ben-Israel notes that the tax will seemingly be passed on to consumers. The decarbonisation of the global economy will only occur when less carbon-intensive energy alternatives begin to displace the dirtier alternatives. Since SA still relies heavily on coal, we will probably not see a reduction in usage anytime soon. However, according to Dr Steve Lennon, the technologies that are incorporated into new power stations will see them burn coal more cleanly than ever before. Pluck the lowest hanging fruit There are many ways that South Africans can address the challenges associated with climate change. However, the lowest hanging fruit should be plucked first. Utilising what we have already in better ways makes sense and can lower the cost of making business more sustainable. Smart metering and smart grid systems are an integral part of meeting global energy demand, according to Gert Schoonbee, Managing Director of T-Systems SA. Flexible energy charging and metering solutions, which move the intelligence out of the meter itself and into a central IT service, deliver devices at a low cost to the user premises, while enabling the rapid fulfilment of new requirements and the fine tuning of business processes, he says. Having centralised smart meters and flexible charging enables a greater degree of client self-service, further reducing the burden on the utilities provider. Schoonbee remarks that given the numerous challenges facing the energy sector today and the growing demand for power across the globe, smart energy solutions are the only answer. Worldwide, buildings are estimated to be responsible for 40% of annual energy use says Phil Gregory, senior regional executive at Johnson Controls Global Workplace Solutions. Over the next few years, as SAs already expensive energy continues to increase in price, energy

meet the reductions, either from a time or operational perspective, they would be able to purchase carbon credits through the mechanism. Thus, the participant could buy a carbon instrument that a third party is able to offer for purchase via the third partys reductions. In this manner, says Ben-Israel, the overall emissions targets can be achieved by leveraging the global network. Therefore, if a participant is unable to meet their obligations they can purchase the oversupply or credits from the market. In order for a participant to have a credible offset credit, the third party provider must have their credits verified through the United Nations Framework Convention on Climate Change (UNF CCC) and the UNF CCC methodology panel. All participants must adhere to the strict standards and methodologies in order for the carbon credits to be acceptable in such a case, the carbon credits are deemed to be Certified Emission Reductions (CERs) as issued by the Clean Development Mechanism (CDM) Executive Board. According to Ben-Israel, companies will be encouraged

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conservation is expected to become an even more important issue for facility managers. Companies that lease space are not just concerned about the rent, but also about the operational costs, providing incentives for building owners to invest in energy efficient measures. Here are six quick and cost-free to inexpensive solutions that can assist facility managers to gain a better control of energy use and spending: 1. O  ptimise time schedules through the building management system (BMS). 2. R  eassess the facilitys cooling and heating needs based on the time of day, year and functions performed. 3. Separate air conditioning and light controls. 4. R  eview the status of air handling units, which are often not functioning correctly. 5. O  ptimise the buildings airflow by employing dampers

that use return air to assist with heating or cooling to achieve additional savings. 6. E  nsure a maintenance schedule is in place and is being implemented. Five solutions that will help facility owners and managers to develop long-term efficiency solutions: 1. L  ook at updating your heating, ventilating and air conditioning (HVAC) system. 2. Upgrade aging fluorescent lighting. 3. C onsider creating operational metrics and enacting behavioural solutions. 4. Certify your building as being green. 5. B  enchmark and optimise building system performance with real-time monitoring. Solutions are out there it really is a no brainer for businesses to act and implement strategies that can improve the efficiencies of running the business.

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SUSTAINABILITY & ENERGY

According to Paul Ben-Israel, businesses need to acknowledge that sustainability is not a passing trend or marketing fad; it is a critical strategic move to enable companies to compete in a changing environment. They must understand that this is also not an operational issue that can be given to middle or lower management; it is a strategic imperative that must have C-suite representation. Companies should perform an analysis or a maturity assessment to understand where they are on a sustainability scale, where they want to be and where they can be. A specific individual should be allocated to drive sustainability initiatives and tie human capital performance into the achievement. Sustainability is everyones job; it should be woven into the fabric of the business, making it a part of the organisational DNA and culture so that it is not just something you do; it is part of your corporate identity. Most importantly, Ben-Israel emphasises that businesses should start pricing products and services differently. Our current pricing regime is usually a cost plus model or a value to price model. However, costs should reflect the true economic cost of producing a product; do not just take todays cost into account companies need to understand the full lifetime cost of using an asset and then price it into todays products. In this way, resources that are going to be scarce in the future and require significant funds for rehabilitation can be paid for today by the consumers using them. Renewable energy projects The development of solar energy is progressing at an unbelievable pace, says Jasandra Nyker, CEO at BioTherm Energy. Thanks to the abundance of sunlight that we receive, we are seeing more large scale projects being contemplated here than anywhere else in the world. This along with decreasing cost of solar panels has increased the sustainability of the solar market. The technology is fast closing in on the cost of traditional coal energy production. BioTherm was awarded three projects in round 1 of the REIPPP. These included the Aries and Konkoosies solar projects, each with a capacity of 10MW and comprised of 45 000 photovoltaic solar modules. Additionally they are working on the Dassiesklip Wind Energy project, which will add a further 27MW of energy to the grid. Another energy business, Cennergi, has signed Purchase Power Agreements (PPA) and Implementation Agreements (IA), which will see it begin construction of two wind farm projects in the Eastern Cape. This is a significant step, says Cennergi CEO, Thomas Garner. These two projects will bring 229MW into the system. The projects commitment

Managing our resources According to GIBS, more than 100 South African sustainability experts agree with their international peers that multi-actor collaboration will play a more powerful role in design of sustainable business models and solutions for regional sustainability challenges. The sustainability field has many case studies from Europe and the USA, which show how companies are addressing environmental, social and economic problems in their operations and supply chains, and working with partners. These cases are inspiring, comments Claire Thwaits of the Transnet Programme in Sustainable Development at GIBS, but often are not easily applicable to our Southern African context. With new research, were meeting the growing appetite among local practitioners for regionally relevant case studies something that can be a powerful accelerator of local innovation when it comes to sustainability. Collaboration continues to be viewed as one of the few models that could catalyse solutions to the sustainable development challenges that we face at the speed and scale that we need. Experts see a significant opportunity for collaboration to accelerate more sustainable business models. They also confirmed the importance of partners having a shared sense of purpose and committing to transparent exchange of information.

Wits Business School Centre for Entrepreneurship

What is the Centre for Entrepreneurship?
Its a widely recognised fact that if South Africa is to develop a vibrant, thriving economy, entrepreneurs will play a crucial role in all economic spheres. With this in mind, 2007 saw the establishment of Wits Business Schools Centre for Entrepreneurship (CfE) in partnership with the Department of Trade and Industry. The CfE is an integral part of Wits Business School and the University of the Witwatersrand, with the aim of alleviating poverty through entrepreneurial development. Our inter-disciplinary approach and multi-sectorial partnerships provide a strategic 360 engagement of the entrepreneurial ecosystem.

Broadly our Work Comprises:

Develop skills in new enterprise creation among potential entrepreneurs, with particular focus on women and youth Foster the professional development of practising entrepreneurs to enhance the probability of survival, success and scale-up of new ventures Help meet the entrepreneurs need for access to opportunity, networking, resources and access to markets Develop specific support for entrepreneurs in different sectors Expand and promote the entrepreneurship knowledge base Increase understanding through research of relevant aspects of the entrepreneurial ecosystem Position CfE and the Wits Business School as thought leaders in entrepreneurial development Organise, lobby and advocate in the entrepreneurship space Entrepreneurship and New Venture Creation Marketing for Entrepreneurs New Venture Growth Business Planning for Entrepreneurs Entrepreneurship and New Venture Creation for Women Entrepreneurship for Health Professionals Practices (EHP2) Opportunity Search and Evaluation for Entrepreneurs

Courses Available:

These are just a few of the many Entrepreneurial courses on offer, to see the full course list or for more information on the CfE Centre visit ww.wbs.ac.za/speciality_courses/cfe. Contact details: Lindy Mataboge Programme Manager T: +27 11 717 3833/32 E: lindy.mataboge@wits.ac.za

E+I 17935

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to socio-economic development was clearly communicated to the communities, which understand that the projects will bring about jobs and skills development programmes. The spinoffs of renewable energy investment both in the Industrial Development Zones (IDZs) and through various wind and solar projects provincially are significant. Renewable energy investments are likely to create thousands of jobs, with wind technologies estimated to produce 1 080 jobs over eight projects. Solar technologies are expected to create an additional 5 000 jobs over 12 projects and, during the construction phases of these, an extra 5 000 jobs will be created. Moreover, according to Ayanda Vilakazi, Head of Marketing and Communications at the Coega Development Corporation (CDC), investment leads to infrastructure development particularly with regard to rail and roads, and inland logistics take the incoming loads into account. Other key spinoffs, says Vilakazi, include a services centre for wind and solar energy, a centre of excellence for green technologies, overall economic development through skills training, technology transfer and small and medium enterprise and supplier development. The CDC operates the Coega IDZ, which has an investment portfolio of R140bn and which has created over 40 000 jobs. In conjunction with the

DCD Group and the Industrial Development Group (IDC), they are constructing a R300mn wind tower manufacturing facility. Henk Schoeman, Energy Sector Marketing Manager for the DCD Group, notes that the facility is expected to create close to 200 jobs, and produce between 110 and 120 wind towers per year. The bottom line Improving the ways business operates is essential to lowering costs and utilising resources effectively. All business owners need to continually look at sustainable products and initiatives to remain competitive. Green alternatives need to be competitive to attract changes in behaviour. Living a more eco-friendly existence is on the increase and businesses are competing against one another to see who is greener. This is a positive step as the renewable renaissance continues to gain traction, more energy will be saved and as a result, we will grow

CONTRIBUTORS

@bbrief1 Eskom 011 800 8111 GIBS 011 771 4000 Johnson Controls Global WorkPlace Solutions 011 017 2500 PwC 021 529 2000 T-Systems 011 254 7400 UCT GSB 021 406 1911

BioTherm Energy 011 367 4600 Cennergi 012 675 6655 Coega Development Corporation (CDC) 08610 26342 DCD Group 016 428 0000 Deloitte 011 806 5000 Department of Energy 012 406 7804

June/July 2013

BusinessBrief

LEGAL

37

Shape up your marks!

South Africa, in principle, allows for the protection of a shape as a trade mark. Shape trade marks must meet the same basic criteria for registering as any other trade mark. Firstly, they must be distinctive and secondly, they must not conflict with any earlier trade marks owned by third parties.

n example of a trade mark afforded protection in terms of the South African Trade Marks Act is the triangular shape of the Toblerone chocolate bar. In practice, however, it is not always a simple matter securing registration for a shape trade mark in SA. One of the main reasons appears to be that the average consumer perceives a shape trade mark as a decorative item rather than a sign that identifies the commercial origin of the goods or services, an essential function of a trade mark. When designing shapes with trade mark protection in mind, it may be useful to consider past case law:  hapes of products cannot be S registered as trade marks in respect of the products themselves. It has been held by our courts that the proprietor of the shape of the Weber grill could not seek monopolistic rights in its design of the shape of its product, no matter how distinctive it might be.

shape in the European Union. The European Court of Justice (ECJ) held that only a mark which departs significantly from the norm or customs of the industry is not devoid of distinctive character for purposes of registration. The ECJ also confirmed the courts earlier finding that the elements that make up the Lindt bunny shape are not sufficiently different from those of the basic shapes commonly used for wrappers for chocolate and chocolate products and, more specifically, chocolate rabbits. Furthermore, the court held that the bow and the elements that are painted on the bunny, such as its eyes and paws, do not render the bunny distinctive but, rather, are ordinary elements that many chocolate rabbit shapes may exhibit.  t is possible for a shape trade I mark that is not inherently distinctive at the outset to acquire distinctiveness through extensive use in the marketplace. It is critical, however, to show that the use has taken place in the territory where protection is applied for. The court held in the Lindt bunny case that there was no concrete evidence

that the Lindt bunny had acquired distinctiveness through use, due to Lindts failure to show evidence of distinctiveness of the bunny shape throughout the whole of the geographical area covered by the trade mark. To assist in proving that a mark has become distinctive through use, it is critical to collect and maintain proper records of all advertisements and marketing materials incorporating the shape trade mark. A shape trade mark can add considerable value to a trade mark portfolio. However, make sure that your ship is in order. When designing a shape as a trade mark, make sure that your shape is distinctive, that it does not consist of the products themselves and always maintain a good record of evidence of use of a shape trade mark in the applicable geographical area. n

 shape trade mark must be A distinctive. This was illustrated by a recent case involving the registration of the Lindt bunny as a

By Lauren Ross Partner at Adams & Adams Lauren.Ross@adamsadams.com By Candice Cothill Associate at Adams & Adams Candice.Cothill@adamsadams.com

BusinessBrief

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LEGAL

WARRANTIES & indemnities

Warranties and indemnities are often lumped together and referred to collectively when lawyers draft contracts of sale. However, there are critical distinctions between the two concepts, which each serve a very different purpose when determining the essential terms of a contract.

n any sale of an asset, the purchaser takes on the risk that the actual asset that it is purchasing differs from the asset that has been represented to them, or that the asset is subject to defects that are not immediately apparent to the purchaser. A purchaser will try to build in warranties and indemnities into the contract of sale, in order to manage and minimise these risks. In many sale transactions, the warranties may be one of the most heavily negotiated aspects of the sale agreement and there is often a tension between the warranty protection required by the purchaser and the extent to which the seller feels comfortable giving warranties that are supported by their own knowledge. A warranty in its simplest form constitutes an express or implied promise that certain facts are as they are represented to be. An indemnity is an undertaking to reimburse the indemnified person for a particular liability should it arise. While both warranties and indemnities give rise to contractual obligations, in practice they work very differently from each other when the terms of a contract are enforced. If a warranty is found not to be true, the relevant contract will have been breached and the innocent party will be entitled to claim damages for the loss that they have sustained. However, in order to successfully claim damages for a breach of warranty, the innocent party will need to quantify the damages that they have sustained and establish a causal link between the breach and the loss that is not too remote. Conversely, under a strictly worded indemnity, the indemnified party need only prove that the indemnified event has occurred and that it has suffered a loss, in order to recover compensation from the other party.

Moreover, while there is an obligation on an innocent party claiming damages as a result of a breach of warranty to mitigate their loss, no such obligation applies to an indemnified party claiming damages under an indemnity. Due to the expanded ability to claim damages for breach under an indemnity as opposed to a warranty, it has become increasingly common for purchasers to request both a warranty in respect of a particular set of facts, as well as an indemnity for all loss suffered or incurred by reason of a breach of that warranty. If one is acting for the seller, it is preferable that any indemnity given by the seller is limited to direct loss and does not encompass consequential damages. Furthermore an express obligation should be placed on the purchaser to mitigate its loss in the event that a warranty is breached. It is desirable that a seller negotiates a position for itself where damages claimed for breach of warranty are subject to a monetary cap and should only be made available for a limited time period. If acting for the purchaser, one would obviously try to negotiate an extensive list of unlimited warranties that are qualified as little as possible by disclosures made by the seller. While there may be extensive interaction between the warranties and indemnities contained in a sale agreement, lawyers need to appreciate the distinction between these conceptually different contractual terms and ensure that warranties and indemnities respectively are harnessed in such a way so as to produce the best possible results for their client, depending on whether their client is the seller or the purchaser. n
@nortonrose_za

By Alice Christierson Associate Norton Rose South Africa alice.christierson@nortonrose.com

June/July 2013

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39

New improved SUPERPOWERS

Our Competition Commission can carry out market inquiries without an initial complaint.
ny market displaying features that prevent, distort or restrict competition is open to investigation by the Competition Commission in terms of the new chapter of the Competition Act. If you arent faithfully reading the Government Gazette, youd better start now because the first market participants will know of a forthcoming inquiry is a notice that the Commission has to publish in the Government Gazette. The Commission is supposed to include in its notice terms of reference for the market inquiry (which have to set out the scope of the inquiry and the time it is expected to take) as well as an invitation to the public to provide information about the market inquiry.

The infamous bread cartel investigation started with a complaint from a small business, imagine where these public invitations may lead. One saving grace is that the Competition Commission may not descend on hapless market participants in dawn raids. It can, however, summon them to provide information and to attend interrogations and those summoned have to attend or face contempt charges. Beware those summonses though because the Commission is allowed to use information obtained in the course of its market inquiry to initiate complaints against firms resulting in consent orders, further investigation or a direct referral to the Tribunal for hearing. That is the really

scary part of these powers. Those powers are really, after all, what this is all about. Yes, the Commission must report to the Minister on its findings and publish that report in the Government Gazette but who really cares about that? At the end of the day when the Commission starts a market inquiry, every firm in the affected market had best take a long hard look at itself before the Commission starts rummaging through its records. Rumour has it that the healthcare industry is first on the hit list. Only time will tell. n By Jennifer Finnigan Partner and Competition Law Specialist at Shepstone & Wylie Finnigan@wylie.co.za

OUR HORIZONS ARE AS BROAD AS YOUR BUSINESS VISION.

For Bowman Gilfillan, keeping pace with business in Africa is not about putting pins in the map. Our professionals share far more than common business interests. Across five offices, our values, ethics and best practice standards are aligned, allowing us to offer local expertise, global experience, and a legal service of consistently high quality.
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BusinessBrief

June/July 2013

40

LEGAL

MARK infringements

he Court also directed that an enquiry be held for purposes of determining the amount of damages suffered as a result of the infringement.

The Supreme Court of Appeal recently handed down a judgment in terms of which Pepkor was interdicted from infringing the well-known adidas three stripe trade mark. In addition to granting the interdict, Pepkor was instructed to remove the infringing trade marks from its footwear and, where the infringing marks couldnt be removed from the footwear, to deliver up the infringing footwear to adidas.

The evidence showed that the world famous adidas three stripe trade mark was designed and developed by athlete and shoemaker Adi Dassler, for athletes competing at the Olympic Games. Through the years many prominent athletes have been associated with the adidas trade mark, making it highly recognised and extremely popular. It is most notably worn by many soccer players during high-profile events like the FIFA World Cup and European Soccer Championships. Pepkor chose to offer for sale footwear that also featured stripes, more particularly four parallel stripes, which bore a striking resemblance to the adidas three stripe trade mark. After a demand by adidas, Pepkor refused to stop selling its sporting footwear bearing the stripes. Adidas had registered its trade mark years before and had relied on these registered rights to institute legal proceedings against Pepkor.

accepted by the Court that manufacturers of sportswear apply a variety of stripes to their footwear. However, should the usage of stripes be such that members of the public would be deceived and/or confused into believing that there is a link between the product bearing stripes and adidas, same would constitute trade mark infringement. Pepkor also defended its use of the stripes by arguing that the adidas three stripe trade mark was so famous that there was no likelihood that consumers would be deceived and/or confused to the effect that footwear bearing stripes was associated with or linked to the adidas footwear. This argument was not accepted by the Court. The conclusion reached was that a greater reputation in a trade mark is likely to result in consumers believing that a competing product bearing a similar trade mark comes from the same source. The confusion by members of the public that products bearing a similar mark to a registered trade mark are products of the trade mark proprietors need only be fleeting for there to be trade mark infringement. Adidas was not only successful in proving that its registered trade mark had been infringed; it also proved that consumers would believe that the Pepkor footwear bearing four stripes was adidas footwear or connected to the brand. Adidas success in protecting its intellectual property is confirmation that these rights are well protected in terms of legislation in South Africa. This is vital for all traders who need assurance that the investment in their trade marks will be protected when these rights are impinged on. n

All traders need assurance that the investment in their trademarks will be protected

Pepkor defended its use of the stripes by explaining that the use of stripes was decorative or for embellishment and not intended to be used as a trade mark. It was

By Louise Myburgh Partner at Spoor & Fisher l.myburgh@spoor.com

@SpoorFisher

June/July 2013

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41

ELECTRONIC LITIGATION Age Cometh

ome years ago, a pilot project was launched in selected Magistrates Courts to test the possibility of processing all litigation paperwork electronically. The plaintiffs attorney would e-mail the summons to the Clerk of the Court for issue who would print the summons, stamp it, allocate a case number, and then file the hard copy. The stamped copy would be scanned and e-mailed back to the plaintiffs attorney and e-mailed to the sheriff for service. The sheriff would print out the summons, serve it on the defendant, and submit a return of service by e-mail both to the Clerk and to the plaintiffs attorney. The defendants attorney could then give notice of intention to defend

and lodge a plea in defence of the claim in exactly the same way. Sadly, the experiment seems to have disappeared into a proverbial black hole. As far as is known, no report on the outcome of the project was ever made public. The door to the possibility of eventual electronic proceedings has been opened. Last year, the rules of the High Court were amended so as to permit every litigant to place their (or the attorneys) fax number and email address on every pleading, and to cater for the electronic exchange of pleadings, where the parties have agreed to this procedure. The distance from the Court of a physical address that must be furnished at which a litigant will accept service of

papers has been extended from eight kilometres to 17 kilometres. This change recognises the migration of legal professional practices from the CBDs of Johannesburg and Durban to outlying areas. Unlike the original pilot project, the original papers in each instance must be delivered physically to the office of the Court registrar for filing in the case file. Apart from this requirement, the attorneys for both parties can, in theory, happily exchange their documents electronically. n

By Michael Hands Consultant Garlicke & Bousfield Inc. mhands@gb.co.za

800 ents stud fee of R3 y d n a l d bers 31 Ju ly bir Mem pp Ear e before d 00 R4 8 ent is ma 800 m y a f R4 if p fee o July d r i ic 31 ly b ! Publ pp Ear e before year 0 d 0 last a 8 m s a s i R5 ce ment e pri if pay Sam

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BusinessBrief

June/July 2013

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TAX

A NEW start
In the Minister of Finances budget speech it was announced that the new permanent voluntary disclosure programme (VDP) which commenced on 1 October 2012 had already seen 700 applications from taxpayers that would result in more than R200mn in taxes being collected.

taxpayer can make a VDP application if he is not aware of a pending or current audit or investigation into his tax affairs but if an investigation or audit has commenced he can only make the application after first obtaining the approval of a senior SARS official. In order for the application to be valid the disclosure must:

a penalty will be levied at 0%.

Taxpayers must make a full and complete disclosure...

It is essential that when submitting a VDP application the taxpayer makes a full and complete disclosure, failing which, SARS can still pursue criminal prosecution. Taxpayers should also keep in mind that the VDP relief is dependent on concluding an agreement with SARS for the repayment of tax. If taxpayers are uncertain about the VDP process they should first seek the assistance of a tax practitioner. n

b e voluntary;   involve a default such as the taxpayer having failed to submit information to SARS, or submitting inaccurate or incomplete information to SARS, or having adopted a tax position that has resulted in an incorrect assessment being issued; b e full and complete in all material  respects; involve the potential imposition  of an understatement penalty in respect of the default; n ot result in any refund due by  SARS; b e made in the prescribed form and  manner. VDP applications can only be submitted electronically via the SARS eFiling system. Once an application has been made, a written agreement must be entered into with SARS. This

agreement must state the material facts of the taxpayers default, the amount payable to SARS, and the arrangements and dates for repayment. Only once this agreement has been concluded will the taxpayer qualify for the VDP relief. The relief given to the taxpayer will include SARS not pursuing criminal prosecution for tax offences arising out of the default. Interest and understatement penalties will however be payable by the taxpayer. This penalty is likely to be somewhere between 0% 10% provided that no audit had commenced at the time of making the VDP application. If there has been no gross negligence or intentional tax evasion by the taxpayer

By Graeme Palmer Senior Associate Garlicke & Bousfield Inc graeme.palmer@gb.co.za

June/July 2013

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43

TRUST Reform

reasury has long been unhappy about certain aspects relating to trusts, in particular that they are perceived to be used to avoid tax. It came as no surprise, therefore, that in the 2013 Budget Review, Treasury announced that government will be proposing legislative measures during 2013/2014 to address tax avoidance through trusts. The proposals are not intended to affect special trusts, established to cater for the needs of minor children and disabled people, or testamentary trusts. Treasury has effectively said that it is unhappy with three aspects relating to trusts. The first is the use of trusts to avoid estate duty, the second is the splitting of income amongst beneficiaries and the third is the abuse of international structures. Avoidance of estate duty As the law currently stands, trusts can be structured in such a way that they provide continuity from generation to generation. As time goes by, assets the value of which is expected to grow over time that might otherwise have been acquired by the planner (the person who formed or at whose instance the trust was formed) are acquired by the trust. When the planner passes on, the trust continues, and SARS is unable to collect estate duty on the trusts assets. While SARS has not yet indicated how they will address this, one possibility is to tax the trust periodically on the value of its assets. This is currently the practice in certain other tax jurisdictions. In effect, the trust will be deemed to die every 10-15 years, thereby giving Treasury the opportunity to collect tax on its assets. Splitting of income to beneficiaries Over the years, tax law has evolved in such a way that trusts have come to be regarded as conduits. In other words, income flows into the trust and can flow out to beneficiaries, where it is taxed, depending on its nature. Very little, if anything, is taxed in the trust itself. The income that flows into a trust, whether its in the form

of interest, rental, a capital gain, etc. retains its nature when its paid out during the course of a particular tax year. Treasury is now saying that trusts should no longer act as flow-through or conduit vehicles and if a trust does distribute income or capital, the trust can deduct the distribution from its taxable income and the beneficiary will pay tax on the distribution as ordinary income. Alternatively, if the income tax is paid by the trust, the beneficiary can receive the payment tax-free. This proposal is aimed at those who avoid tax by splitting the income earned within a trust among beneficiaries who have lower tax rates than those of the founder of the trust. Abuse of international structures Treasury also wants to target schemes designed to shield income from global taxation. Accordingly, it has proposed that distributions from offshore foundations will be treated as ordinary revenue in the hands of beneficiaries. A foundation is a hybrid between a trust and a company. Currently, if a foundation receives dividends, for example, and distributes these to SA residents, they will be taxed at an effective rate of no more than 15%. However, if dividends are going to be seen as ordinary income, they could be taxed at up to 40%. Treasurys proposals are a fundamental shift from the way trusts are currently being treated for tax. If the proposals proceed, trusts will be put on an equal footing as other taxpayers, for example companies, but subject to a higher rate of tax. n

By Bernard Sacks Tax Partner at Mazars Bernard.sacks@mazars.co.za

@MazarsGroup

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44

TAX

e-commerce VAT collection!

resently, foreign suppliers of services through e-commerce, whether they are of a professional service or retail nature, are often not required to register and collect VAT from the customer in South Africa. This leaves the obligation to pay the VAT on the buyer who is required to account for the VAT through the reverse charge mechanism. Practically, the buyer of the item is required to visit SARS and account for VAT on the services acquired from the foreignbased supplier. Buyers, however, are often not even aware of their statutory obligation to account for VAT. In addition, insufficient and inadequate controls exist to monitor and enforce these obligations on the man in the street. Effective measures to enforce the payment of VAT on e-commerce should therefore be addressed as a matter of urgency. Place of supply rules provide guidance as to where a transaction is taxable and by whom the tax must be collected and paid. Since these matters mainly affect the cross-border supply of services there is often a lack of clarity on whether transactions should be subject to South African VAT. With e-commerce simplifying the purchasing process, consideration had to be given to the fact that its growing popularity could see vast amounts of VAT not being collected for state coffers and a loss to the fiscus of funds that could be used to the benefit of all citizens. Another important consideration is that ineffective VAT collection on e-commerce transactions gives foreign suppliers an advantage over local suppliers who are required to collect VAT from their customers. The enforcement of VAT collections from individuals in terms of the reverse charge mechanism is a mammoth task as the VAT net is not only persons who are registered for VAT,

but also private individuals who have access to the internet and buy services from nonresidents. The costs of collecting the VAT from private buyers could outweigh the revenue collected. Collection by trusted third parties may be found to be the most efficient and effective method of collecting VAT. The non-EU supplier imposes VAT at the VAT rate applicable in the destination jurisdiction but declares and pays the VAT in the EU jurisdiction where they are registered. The EU jurisdiction of registration, in turn, transfers the respective VAT amounts to the relevant destination jurisdictions. Until changes to the system are made here, South Africans will continue to buy through e-commerce channels, using VAT law that states that there is a VAT exemption for imported services where the transaction value is R100 or less. This means that any transaction exceeding R100 in value does not qualify for the exemption. On the other hand, unlimited transactions that each fall below the threshold qualify for exemption and do not attract VAT opening a loophole for users of electronic systems. The Minister announced in his budget speech that foreign businesses that sell e-books, music and other digital goods and services should be required to register as VAT vendors and that this practice is in line with regulations that have been adopted by the EU and other jurisdictions. It would however be important that clear rules are provided to ensure that foreign e-commerce suppliers are aware of their VAT obligations. n By Severus Smuts Director Deloitte ssmuts@deloitte.co.za By Dr Anne Bardopoulos Assistant Manager, VAT Deloitte abardopoulos@deloitte.co.za
@DeloitteSA

The impact of VAT on electronic payments through the Internet has not been fully appreciated by the law makers, which has fallen behind other countries when it comes to the effective collection of tax revenues generated though e-commerce channels by nonresident suppliers selling to private individuals not registered for VAT, until now.

June/July 2013

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TAX

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Notice raises RISK

Section 66 of the Income Tax Act No. 58 of 1962 (the Act) requires the Commissioner to give public notice annually of the prescribed time period within which persons who are liable to taxation under the Act must furnish their tax returns. The time period applies equally to persons who are not necessarily liable to taxation but who are in any event required by the Commissioner to furnish returns for the assessment of tax.
royalties from companies located in South Africa will be receiving gross income for South African tax purposes whereas in the past, the source of these income streams may still have been located abroad. Furthermore, this obligation is rendered all the more nonsensical because any company declaring dividends, etc. to a non-resident is obliged to deduct withholding tax at 15% unless varied by a tax treaty. Given that the notice requires companies to furnish their tax returns where gross income is derived from a South African source, the combined effect of section 9 and the notice will be to increase the administrative burden of these companies. If it is really SARS intention that each and every foreign investor must furnish a return, the non-resident will now be required to register for tax in SA even where it is ultimately not liable to South African tax. It is also likely that many nonresident companies affected by this announcement will remain uninformed and be subject to administrative penalties for not furnishing their tax returns. The latest notice issued by SARS potentially raises a new administrative risk for non-resident companies receiving passive income from SA. However, on balance, this would appear to be an administrative error given the ability to ensure the full liability is already catered for through the withholding tax mechanism. Until the matter is resolved, however, due regard needs to be had when advising foreign clients of their South African tax registration and filing requirements. n

n 29 June 2012, SARS issued its annual notice in the Government Gazette, which provided that every company, trust or juristic person, which is either a resident or which derives any gross income or capital gain from a source within the Republic, must furnish a tax return within 12 months from the date within which its financial year ends in respect of the 2012 year of assessment. This announcement, which perhaps escaped the attention of many people, is likely to be problematic in light of our source rules contained in section 9 of the Act, which makes it clear that the source of any dividends, interest and royalties is where the paying company is located. Section 9 has the effect that non-resident companies receiving dividends, interest and

By Johnathan Harley Tax Consultant ENS jharley@ens.co.za

@enslaw

bbrief.co.za is a portal where business decision makers can access business resources in South Africa that effect their decision making ...

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FINANCE & EQUITY

Managers FIDUCIARY responsibilities

It is important for people in executive and management positions to be aware that, despite not being formally appointed and elected as directors, they could be subject to the same fiduciary duties and liabilities as formally appointed directors under the Companies Act, 2008.
a prescribed officer, one needs to look at the persons actual conduct in the context of the company and situation, not their title or function. Assuming that it is correct that the prescribed officer provision in the Act is intended to catch those who are not formally appointed as directors but still exercise influence on the decision-making process of a company, and are regularly involved to a material degree in the management of such company, one could conclude that a prescribed officer is a new creature under the Act who exists alongside a formally appointed director or an alternate director. Another question that has been raised in the context of the kind of executive control or management that is required to qualify as a prescribed officer is whether these need to be direct control, or whether indirect control and management suffices? If South African courts interpret this to include indirect control or participation, so-called shadow directors could constitute prescribed officers. Shadow directors are well known in other jurisdictions, and they generally exercise indirect influence or control by way of instructions to a companys directors who, in turn, are accustomed to acting in accordance with such instructions. However, this excludes professional advisors instructions. Shadow directors are typically encountered in lending scenarios when a bank advances a loan to a borrower client and then negotiates the right to observer status on the clients board in certain situations, usually default scenarios. It seems that even if a prescribed officer excludes directors and alternate directors, the definition is wide enough to include a shadow director, as well as anyone else who participates regularly in managing a companys business or activities. Whilst the concept of a prescribed officer is a new one under the Act and will no doubt be subject to much interpretation by the South African courts in the future, it is important for persons in executive and management positions to be aware that despite not being formally appointed and elected as directors, they could be subject to duties and liabilities under the Act and can, for all intents and purposes, be treated as directors of the company in question. n By Lischa Gerstle Director Bowman Gilfillan L.Gerstle@bowman.co.za
@BowmanGilfillan

he concept of a prescribed officer is a new one under the Act, and is likely to be subject to much interpretation by our courts in the future.

Many of the provisions of the Act that regulate directors also apply to so-called prescribed officers. Some examples include an obligation to disclose personal interests in company matters, to exercise reasonable care, skill and diligence and to act in accordance with the fiduciary duties codified in the Act. The Act defines a prescribed officer as a person who despite not being a director of a company, regularly exercises general executive control over and management of the whole, or a significant portion, of the business and activities of the company, or who regularly participates to a material degree in this exercise of control. This definition applies irrespective of any particular title given to the person in question or function performed by that person for the company. It will be up to the courts to determine on a case by case basis the nature, degree and amount of participation or control that is required to term a person a prescribed officer for purposes of the Act. In determining whether someone qualifies as

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47

An attractively DISGUISED THREAT

There are 19.69mn active credit consumers, of which 53.1% are considered to be in good standing. The number of consumers with impaired credit records has slowly been deteriorating from only 37.7% (in late 2007) to the current level of 46.9%.
mportantly, a credit amnesty was applied in June 2007 just prior to the inception of the National Credit Regulators (NCR) reporting on the level of good standing of consumers. The 2007 credit bureau amnesty applied resulted in the automatic deletion of certain judgements. Research undertaken by the Credit Bureau Association on a sample of 600 000 affected consumers revealed that 64% of these consumers who benefited from the amnesty entered into new credit agreements and 74% of the individuals who obtained credit had bad (3+) or adverse accounts. This exposes a crucial consideration, did the 2007 amnesty result in credit granting to consumers who were stilled stressed but not reflecting such in their credit profiles putting further strain on their monthly repayments, and did affected consumers benefit from any key learnings regarding how to manage their credit and their credit profiles? There are currently consultations underway to assess a second credit information amnesty. The Department of Trade and Industry (DTI) and NCR recently provided interim feedback on the key findings of an impact assessment. Some of these key findings include: T  he need for appropriate affordability assessment guidelines Appropriate credit literacy programmes By Michelle Dickens Founder and Managing Director Tenant Profile Network (TPN) michelle@tpn.co.za
@tpnadvice

A  ny amnesty should take place after affordability assessment guidelines have been implemented and should include a consumer education process highlighting the amnesty does not result in writing off the debt nor the obligation to pay but merely expunges the display of the judgement or adverse information on the credit bureau. The findings seem to relate to the removal of judgements, dormant accounts and adverse information under R10 000. Specifically the removal of adverse information under R10 000, that would benefit 86% of people earning less than R15 000. The final report is expected sometime next month, which will give clarity on what the final amnesty will include. n

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FINANCE & EQUITY

Attachment hampers BUSINESS RESCUE

One of the most innovative features of South African company law is the inclusion of Chapter 6 of the Companies Act 71 of 2008, focussing on business rescue. usiness rescue is a substantively non-judicial, commercial process, which seeks the ultimate rescue of a company in financial distress by maximising the likelihood of the company staying solvent. Failing this, business rescue seeks a better return for creditors and/ or shareholders than would result from the immediate liquidation of the company. But having come into effect in May 2011, it is probably worth asking whether business rescue is working as intended. Recent statistics are quite startling, with approximately 12% - 15% of companies in business rescue successfully recuperating from financial distress. According to the CIPC at present only approximately 100 out of the 840 companies that have filed for business rescue have successfully turned around. This suggests that the majority of companies entering business rescue do not have realistic and deliverable long-term business plans and cannot produce the cash flows that were initially projected when business rescue was applied for. A contributing factor to this is the general assumption that business rescue constitutes a predominantly legal process. In reality, the essence of a successful turnaround ultimately depends on a companys ability to generate cash, thereby enabling it to exit business rescue and become a self-sustaining business.

A successful turnaround depends on a companys ability to generate cash

The importance of seeking legal advice when considering filing for business rescue is indisputable. However, there appears to be insufficient focus given to challenging the financial business plan, which underpins the entire decision-making process. This is especially relevant given that the plan has generally been prepared by the board of directors, and employees of the company, all of whom have a vested interest and an emotional attachment to assuming that the business can be saved. This typically results in unrealistic projections of what would be required to save the business. In 2012, the number of voluntary liquidations fell by 24.5% relative to 2011, while the number of compulsory liquidations also fell by 16.8% in the same period. This gives some credence to the interpretation that companies are benefiting from business rescue and associated processes. There is a far greater role for independent financial specialists to

play in providing an objective and realistic view on the business plan, prior to filing for business rescue. This independent viewpoint will enable both the lawyers and the board of directors to take a clear view on the integrity of the business plan and whether business rescue is a viable option. A good financial advisor will also highlight other potential mitigating actions that could be pursued, such as the sale of a division or asset and cost saving exercises that may not previously have been considered, and could even avoid the need for business rescue entirely. Seeking this sort of advice can only improve the success rate of business rescue in South Africa by excluding those companies that have followed the process as a last ditch attempt but are ultimately doomed. It is becoming increasingly evident that if you dont adequately prepare for financial distress and business rescue, chances are you probably wont survive it. Business rescue needs to be approached as a financial and technical, as well as a legal process. That may help improve its chances of success. n

By Stuart Wilson Restructuring Services Team Deloitte

stuwilson@deloitte.co.za

By Wanya du Preez Restructuring Services Team Deloitte wdupreez@deloitte.co.za

@DeloitteSA

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Unsecured lending MUDDIES waters

As more South Africans begin to feel the financial pinch unsecured lending values have also increased and a growing number of borrowers are still struggling to repay their debts. he majority of South African consumers are gearing up for even tougher times going forward as food, power, transport and fuel prices are increasing. The petrol price has increased by 81c a litre and electricity will increase by 8% in the next three years. Whereas, in the past, the traditional unsecured lending market had been dominated by low-income earners taking on relatively small amounts of debt, recent months had witnessed larger unsecured loans being taken on by more middle-income group borrowers.

This new dynamic illustrates the increasing financial strain being experienced by the middle-income groups as well, many of whom are resorting to unsecured finance to meet the inability of their income to cover their living costs. Consumers should be urged to budget sensibly and trim all nonessential spending during these tough times. Learning how to effectively manage your credit commitments is key to financial stability. And, given the current inflationary pressures caused

by the weak rand and the nationwide strikes, the problem is likely to worsen rather than improve at least for the foreseeable future. Consumers should take advantage of the free annual service provided by the credit bureaus as prescribed by the National Credit Act, giving consumers the right to access their credit reports once a year at no cost. n

By Michelle Beetar Managing Director Experian South Africa dhammond@experian.co.za

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BusinessBrief

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ASSETS & INVESTMENTS

Africa OPEN FOR BUSINESS

By Ajen Sita CEO Ernst & Young Africa ajen.sita@za.ey.com

Emerging economies continue to grow more quickly than mature ones. Developing markets may grow by as much as four percentage points higher. Africa is likely to provide the most consistent and robust rates of growth over the next 10-15 years. In 2011, more than 15 African economies registered growth rates higher than 5%, despite a slow recovery from the global recession. There is now considerable interest that firms and financiers both within Africa and around the world have shown in developing strategies to tap into Africas growth story and potential.
accordingly, or take a risks-first approach and only weigh opportunities after first filtering for risk. Successful entities have tended to do the former. Planning: Patience and persistence: results: While it is often said that rewards go to the bold, in African investing it is also true that patience pays. Experienced foreign investors repeatedly note that nowhere else is there such a direct correlation between careful planning (and flexibility about plans once formed) and a successful outcome. Places: Seek platforms and hubs: Africas hallmark is diversity; the barriers to creating bigger and deeper common markets and trade areas are considerable, but are arguably receding. Strategy-making around African growth opportunities involves positioning oneself at key nodes; executing such strategies then involves thinking in less conventional ways, both below the country-level (African opportunity as turning on various key cities) and beyond the country level (African opportunity framed in terms of regions and other potential groupings). Partnerships: Relationships matter: Perhaps more than in any other continent fostering good, proper relations with all levels of government will continue to be vital to realising strategic aims. Similarly, we believe that strong local partnerships are critical to success. Furthermore, the last decades focus on competition among foreign players obscures the scope for cooperative partnerships harnessing different players strengths. People: No strategy is self-executing: Sustainable success in Africa will increasingly turn on identifying, nurturing and retaining talented and committed local staff. Meanwhile, for firms focused on reaching Africas many under-served customers, effective strategy execution is people-focused in another sense: not allowing top-down approaches (informing new consumers of their options) to obscure bottom-up receptiveness (being responsive). Within an overall context of strategic flexibility, the 5 Ps framework is intended to assist in supporting decisions on and responses to the factors that are most critical to effective strategy execution in Africa. n

or many, the question has moved beyond whether to have an Africa-wide strategy and what content it should have, to executing strategy in ways that unlock value, adjust to change, and safeguard assets and investments. A relatively small number of macro-factors will tend to shape a companys ability to unlock value in Africa (as well as deepen and protect investments) as it moves from strategy to execution. Plans will be exposed to the wider global geopolitical and economic forces and Africas constraints, from energy reliability to transport infrastructure deficits. Moreover, general business considerations and contingencies apply equally in Africa as elsewhere. Africas growth momentum and potential is undeniable. Consider these five macro-factors that are vital to maximising strategic opportunities and minimising strategic risks when doing business in and between African countries: Perspective: The eye of the beholder: African business ventures can be risky, but no more so than those in much-hyped emerging markets in other regions. Giving substance to ones Africa strategy involves a choice: one can emphasise a search for opportunities and then factor in risks

@EY_Africa

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BusinessBrief

June/July 2013

52

ASSETS & INVESTMENTS

FIXED-INCOME INSTRUMENTS
he South African equity market may have hit record highs in recent months but with so much continuing uncertainty around local and global economies, fixedincome instruments are set to see significant uptake in the coming months, as investors seek a stable income and access to the markets at lower risk. With negative sentiment around the rand, combined with political instability and the knock-on effects of recent wildcat strike action in South Africa, which is set to have a serious impact on the profits of many corporations over the next 12 months, investors should look to hedge their exposure with lower-risk instruments.

Instruments are aligned with risk profiles...

During times of economic uncertainties such as slower global economic growth, fixed income assets can often perform better than equities on a risk-adjusted basis, as bond prices are well-supported in a low inflationary environment. The same principle should be applied by local traders to diversify their risk. Trading in equities is a familiar concept to most traders and one that novice investors tend to perceive

as high risk. However, bonds are a far safer investment as they represent debt, rather than equity, in an organisation. The benefit of bonds trading is that while there is a risk of capital loss, as with any investment, it is far safer than equity investments. Furthermore, among the most secure bonds are government bonds, which allow traders to assess both the interest rate levels and the creditworthiness of a government before investing. Long-term fixed interest securities issued by a central government are known as sovereign or government bonds, and its the dependability of

PRIMING SAS TREASURES FOR THE INTERNATIONAL STAGE

By Alan Demby

The way we market our art and collectables, domestically and internationally, is now more important than ever.
More than a commodity, South Africas art contribution to the world is the ultimate branding for the country. South Africas art and collectables market is now firmly aligned with the international trading ground and the exciting news is that there is a recent surge in demand across the world for South Africas numerous emerging artists. Our great masters, both living and gone, continue to command strong values, but its the up-andcoming artists whose work needs to be promoted and celebrated. Having successfully navigated the domestic and international coin markets the recent acquisition of Stephan Welz and Co. by The South African Gold Coin Exchange (SAGCE) has created a partnership that, with a combined experience of 84 years, positions the group to provide specialist services to local and international collectors and investor alike. For over 40 years The South African Gold Coin Exchange and The Scoin Shops have successfully been dealing, both locally and internationally, in rare and collectable gold coins and medallions and its success largely boils down to one principle bringing something previously considered the preserve of the elite to the man-in-the-street. How does this translate into art and collectables? Transferring the learnings to the Decorative and Fine Arts Auction industry - the principle is identical. Consumers interests in art is growing and Stephan Welz &Co. facilitate seasoned buyers as well as first time buyers by helping them understand the process, creating good accessibility and, most importantly, generating a feeling of confidence in the process. The company has facilitated these initiatives by offering lectures on buying art, weekend gallery accessibility, and open days for meeting the experts and exposing ones collectables to knowledgeable comment. SAGCE and Stephan Welz & Co. recently created two art galleries in Nelson Mandela Square and Sandton City shopping mall; galleries that attracted people who had never before been exposed to such an exhibition. Judging from the unprecedented response, their journey into the world of collectables began right there and then. Among other recent initiatives, have been zero percent commissions on sales of big ticket items and on sales concluded with all first-time buyers. For the average collector, the big ticket items are perhaps beyond their reach. Even so, there is nothing to stop them from starting to buy collectable items right now, be it art or gold, without having to commit to a hefty price tag. The recession has taught us that investing in assets that everyone thought were safe was not as safe as they initially believed. Impressively, though, art, collectables and gold held. Indeed, South African art has increased ten- fold over the past decade, while looking ahead, emerging South African artists are poised to achieve major exposure around the globe.

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tax revenues that often make these securities the safest investment. There is a crucial need for increased education among South African traders so that they are able to make informed decisions when choosing between all the investment options available to them. Even among our own clients, we find that there are misconceptions regarding bonds and many traders do not know that they can make use of bonds to trade in a lower-risk environment. As such, we are on a big drive to increase awareness around the different instruments available and how they can be used to diversify a portfolio.

It is important that online traders fully understand the fundamentals and techniques involved when it comes to self-investing. Its less about understanding the dangers and more about understanding the principles behind online trading. The most successful investors are those who have taken the time to learn about what steps they need to go through in order to confidently selfinvest. By researching the kinds of investments traders want to get involved in, they could discover instruments that are closely aligned with their risk profiles and therefore enjoy a smoother self-investment C M Y CM MY journey. n

CY

By Andrew Kinsey Head of Risk GT247.com CMY K akinsey@gt247.com

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ASSETS & INVESTMENTS

PRESERVATION vs pension funds

When you change jobs, you receive a pension pay-out, but the best thing to do with these funds is to keep them invested for your retirement. National Treasury is currently investigating ways to enforce preservation in response to an alarmingly high withdrawal rate of retirement savings prior to retirement.

e are already heavily incentivised to preserve the funds through the tax structure: any withdrawal is taxed at the taxpayers marginal tax rate which, at present, can be up to 40%. In addition, drawdowns of these savings can significantly reduce your likelihood of being able to earn enough income in retirement to sustain a desired lifestyle. When starting a new job, you will be able to move your pension across to the new employers pension fund, or you could opt to retain the assets in a provident fund. What should you consider when making this decision? Both the new companys pension fund and preservation funds are governed by the Pension Funds Act, but there are certainly differences between them. These differences relate primarily to accessing the funds, investment choice offered, costs and the type of fund at your existing company and at your new company.

A pension fund will only allow you to access your savings upon retirement, whilst a preservation fund will allow one full or partial withdrawal...
C  hoice: The new companys pension fund may allow investment choice subject to the rules of the fund, but some pension funds have a predefined portfolio. We would recommend you enquire about the specific funds rules. Most preservation funds on the other hand offer more investment flexibility, usually through a choice of unit trusts. For a more sophisticated investor, a preservation fund may offer the investment flexibility required. However, for many investors, too much choice can be problematic and difficult to manage. C  osts: Costs may also be very different in both products. It would be critical for you to establish the all-in cost of the funds you may be considering. Costs can significantly reduce the performance of a members account in a fund. What might appear to be a small difference in cost per annum, will have a significant effect on the value of the investment when measured over 30 years. The cost differential may thus be a major factor in making a decision. F  und type: The above assumes that the current savings are in a similar type of fund to the one your new employer offers. If the current fund is a pension fund and the new fund is a provident fund, it may not be possible to transfer the funds and hence a preservation fund would be necessary to house your savings.

A  ccess: A pension fund will only allow you to access your savings upon retirement, whilst a preservation fund will allow one full or partial withdrawal before retirement. In addition, you may transfer from one preservation fund to another at no cost and at any time. Even if you think you may not wish to withdraw your savings, this difference may be critical at another stage in your savings lifecycle.

By David Elliot Investment Professional Marriott Asset Management elliottd@marriott.co.za

You need to consider your possible future requirements to access your funds, the investment choices offered, costs and the type of fund (pension or provident) in making your decision. n

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55

Banks REMAIN resilient

The financial results of South Africas four major banks (Absa, FirstRand, Nedbank and Standard Bank) for the year ended 31 December 2012 have remained resilient amidst the recent global economic turmoil, according to PwCs South Africa Major Banks Analysis Report: Growing in an uncertain world.

he major banks will find it difficult to return to previous levels of profitability as a result of regulatory challenges, such as compliance with revised Basel II.5 rules that have been phased in from 1 January 2012 and two of the major credit agencies revising the countrys outlook from stable to negative. South African banks still have some of the strongest capital levels worldwide and we expect the major banks to remain resilient and continue to produce solid financial results. After two years of higher range double-digit profit growth, underlying aggregate earnings rose by 11.3% to R47bn during 2012 (2011: R43bn). In contrast to previous years, the major banks results varied significantly this year, as each bank faces its own set of challenges and focused strategies begin to play out. Good credit growth has resulted in an increase in net interest income of 11% (R105bn) year-on-year, and continues to contribute significantly to the bottom line. Banks have managed to continue growing their net interest margin, despite the stable, low interest rate environment and changes made to the composition of the balance sheet. Growth in earnings during 2012 was further enhanced by increased noninterest revenue (NIR) of 13.7% (R102bn). NIR is largely driven by fee and commission income, which represents 70% of the total for the second half of 2012, up from 68% in the first half of the year. This remains a highly competitive area in which the major banks are focused on widening the net and banking the unbanked. In so doing, the banks are finding innovative

ways to reach their customers. We have also observed a strong trading performance from the banks African trading operations, given the strong economic growth being experienced in many of the rest of African countries. Fair value income continued to remain volatile and was down 16% on the first half of the year. Banks concerns about the European sovereign debt and a fiscal eruption in the US, as well as concerns about fluctuations in equities and commodities markets had an effect on trading conditions, states the report. Looking at credit growth, gross loans and advances increased by 5.7% from the previous period. All of the major banks reported robust credit growth, with total growth in card lending for 2012 amounting to 27.4% (2011:2%), while other unsecured lending grew 19% (2011: 12.4%). Combined total advances growth for the year of 5.7% was supplemented by a 9.5% decline in total non-performing loans (NPLSs). This was largely driven by a continued improvement in the retail credit experience of the major banks. Major banks continued on the positive path of increasing total qualifying capital and reserve funds. Overall, the major banks have all indicated that the transition to the higher capital requirements of Basel III, effective from 1 January 2013, should take place without significant deterioration in regulatory capital levels. On the positive side, SAs large banks are strong, well capitalised and performed soundly with good revenue growth. However, containing or reducing costs will remain a priority

By Tom Winterboer Financial Services Leader PwC tom.winterboer@za.pwc.com

@pwc_za

for banks. This will also be affected by the cost of regulatory challenges and continuing core banking IT enhancements. The focus on Africa is starting to pay off, but it is coupled with significant executive management attention and investments being made. Execution will continue to be the differentiating factor, both with regard to strategy and the optimal utilisation of capital not only in the form of financial resources, but also human capital. n

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BANKING & INSURANCE

Lower PREMIUMS with mPOS

The local launch of the first mobile point-of-sale devices (mPOS) set for November this year, is perhaps the ultimate solution to stop attacks on businesses by armed groups looking to steal cash. mPOS, a card-acceptance solution that turns a cell phone into a secure point-of-sale device via an accessory that can be plugged into the phone jack, allows the consumers smartphone to be used as a tool to make payments by credit and debit cards.

y adopting mPOS and implementing a no cash/cards only policy, businesses may potentially see a decrease in cash robberies. The adoption of this method could also see a decrease in companies insurance premiums. Businesses operating in South Africa, especially small and informal businesses, are often under financial pressure to insure themselves against robberies. One of the biggest challenges businesses often face when carrying cash is the possibility of a robbery. It is often the small businesses who lack the resources to continue operating after the incident. The latest SA Police Service (SAPS) crime statistics reveal that robberies in the business sector increased by 8.8% in 2012 compared to the previous year. Adopting a cashless system, such as mPOS, could lower the risks of armed robberies, which could in turn bring down the cost of insuring ones business, making insurance more affordable for small businesses. Small businesses and retailers already spend high premiums on fidelity insurance. We believe the adoption of mPOS could lead to an increasingly secure mode of transacting by removing the cash dynamic in purchases.

card payments are now also adopting mPOS and implementing its solutions.

Adopting a cashless system, such as mPOS, could lower the risks of armed robberies
South African consumers will adapt easily to mPOS; for example, Mastercard is currently aiming to enable 75% of small and medium-sized enterprises to adopt mPOS, and with 29mn people in SA owning a cell phone, there is huge opportunity for devices such as this. Currently point-of-sale devices are rented to vendors at about R250 a month with a merchant fee charged on transactions, and that mPOS devices will also benefit the small business owners as it is said to cost less than this, making them more attractive to smaller traders. Although the official prices have not been released for the South African market, were confident the solution will be much cheaper. In the US, the software has been adopted for a period of a year now and costs between $10 and $20. n

By Robert Boccia Executive: IT Lion of Africa Insurance Robert.boccia@lionsure.com

@LOAInsurance

mPOS is currently being adopted by small businesses around the globe that have previously only worked on a cash basis, never accepting card payments. To improve the retail and payment experience, retailers that already accept

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BusinessBrief

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BANKING & INSURANCE

TELEMATICS for SAFETY

Vehicle telematics devices which use technology to send, receive and store real-time driver behaviour data are fast becoming the most effective and scientific way to calculate motor insurance premiums.

s telematics is enabling insurers to gain a more accurate picture of the motorists driving behaviour, motor insurance premiums can now be tailored to the drivers individual risk behaviour. Already highly adopted internationally with research indicating that by 2017 there will approximately 89mn global insurance telematics users consumers, particularly those who practice good driving behaviour, are becoming more aware of the technology and the benefits of calculating premiums that are more tailored to their specific usage of their motor vehicle. Insurance is all about measuring and calculating risk. Insurance underwriters evaluate the level of risk and then set premium rates and coverage according to the measurement in question. In the past, premium calculations depended largely on basic information, such as vehicle characteristics, use of the vehicle, location and driver details including past driver history, age and gender. Through the use of telematics devices, the type of data that can be collected by a telematics unit includes, but is not limited to: excessive speed throughout the journey; swerving and sudden manoeuvres; mileage travelled; time and date of travel; and the vehicles actual speed versus the average speed of all other vehicles, which can help ascertain whether a vehicle is speeding, but still driving consistently with other road users.

This technology now allows for premiums to be determined by actual driver performance, resulting in a far more accurate depiction of driver behaviour and ultimately results in fairer rates being charged for law abiding, fuel-conscious drivers. Traditional methods of calculating motor insurance premiums have resulted in good drivers being charged more than they should be for their motor premiums because they are, to a certain extent, paying for the increased risks that bad drivers present. Telematics now allows for a more objective and personalised premium calculation where good drivers are actually rewarded for their safer behaviour. In addition to the benefits of accuracy of premium versus driver risk, there are other advantages for motorists who utilise telematics technology. Due to the fact that the device allows for continuous communication between the driver and the insurance provider, valueadded benefits such as immediate emergency notification and services, road side assistance, vehicle tracking, driver monitoring and vehicle diagnostics are now more easily available. First notification of a loss is a hugely positive component of the telematics proposition. When a vehicle has a potential incident, the force of the impact is detected by the device, which then sends an alert to the emergency service centre to contact the customer to find out if they need assistance. Given South Africas high accident rate, this makes telematics highly beneficial from a personal

safety perspective. In exceptional circumstances, telematics could prove the difference between life and death if an alert with very high G-force impact is received, which has occurred in a potentially hazardous place, and statistical data indicates that the car is stationary and the ignition still on but there is no response when attempting to contact the customer, emergency services can be dispatched to the scene immediately. Telematics creates an incentive to encourage safer driving on our roads, as the better one drives, the more they are rewarded in the form of premium reduction. It will not be long before most insurance providers in SA will be including telematics technology in their product offering telematics is the future of the motor insurance industry. n

By Christelle Fourie Managing Director MUA Insurance Acceptances cfourie@mua.co.za

@mua_insurance

June/July 2013

BusinessBrief

BANKING & INSURANCE

59

Bank precaution URGED

With the Protection of Personal Information Bill (POPI) expected to be promulgated this year, the focus on protection of consumers personal information is becoming increasingly important for the local banking sector which handles and stores thousands of clients personal information on a daily basis. the eyes of competitors and companies may find their competitive advantage is lost. Shredding unwanted documentation remains the most effective data destruction method as it ensures the documentation cannot be reconstituted in any way. Employing the services of a reputable data destruction company that is compliant with international standards of data destruction is the most reliable way of ensuring confidential documentation does not fall into the hands of unauthorised parties. In light of the impending POPI coming into law is essential for all businesses to protect their information at all transaction points and employ strict governing principals at all branch locations to ensure no documentation is left exposed to avoid the consequences of non-compliance. n By Gianmarco Lorenzi Managing Director Cleardata gianmarco@cleardata.co.za
@theshreddingguy

hile head office may already be working closely with legal teams to ensure compliance, they may be forgetting about an often overlooked aspect of the organisation its network of branches across the county. It is imperative to ensure that regulatory requirements extend to all areas of the organisation, regardless of their location, as noncompliance with legislation governing data protection branches could potentially lead to the downfall of the organisation. The POPI standards require that personal information is not only securely stored and managed, but also properly disposed of in a manner where the information cannot be reconstituted. Every company that has access to personal information relating to their employees or clients has a responsibility to dispose of that information in a proper manner. Risks are faced by all industries, however financial institutions such as the banks are faced with an even greater risk due to the vast amount of personal information they have relating to their clients. If documents are not disposed of effectively the organisation could face legal, reputational and financial consequences. Companies can be held liable for identity theft if clients information falls into the wrong hands. Casually discarding information shows a callous disregard for customer and shareholder interests. It is advisable to ensure that all organisational branches are reviewed constantly with regards to data protection regulations and necessary steps are taken to ensure adequate levels of compliance. Besides compliance with information protection legislation, organisations also need to protect company trade secrets from competitors. If confidential information about a new product line or strategic plan is left laying in an exposed rubbish bin it is vulnerable to

BusinessBrief

June/July 2013

60

MARKETING & SELLING

Do NOT embellish!
outh African laws protect against unfair marketing and business practice including dishonest advertising and labelling. This principle is encoded in the Advertising Standards Authority (ASA) Code of Conduct which requires honesty in adverts as well as calls for factual claims and disallows misleading claims. The Consumer Protection Act 68 of 2008 (CPA) reinforces the requirement of disclosure of all relevant information and that such disclosure be in plain, factual and understandable language. Communication forms and the actual information itself are not without legal paradigms and safeguards. Advertising is a persuasive communication form that engages in visual or aural creations to promote sales or to advocate ideas through different media. Communication of information via words, short phrases (tag lines), figures, letters and aesthetic characters, however, is called labelling. The Common Market for Eastern and Southern Africa (COMESA) Competition Regulations protect consumer rights against false or misleading representations, unconscionable conduct in consumer transactions and provides for product liability and safety and information standards, and provides for compulsory product recall. Note: South Africa is not a COMESA member state. Will ECOWAS, CEN SAD, ECCAS, IGAD, UNION DU MAGHREB and SADC follow suit? This is worth watching out for as they too may have an effect on transactions in Africa. Companies can prevent/minimise legal claims for unfair advertising and labelling by: H  aving an internal company guide which sets out the legal guidelines for all adverts be they ATL (above the line) BTL (below the line) and for Public Relations (PR) releases. E  nsure marketing teams and PR teams are trained on this protocol. Once trained: retrain to ensure compliance as they are generally the teams that are involved in By Ayesha Dawood International Corporate, Technology and Communications lawyer Ayesha Dawood Attorneys ayesha@ayeshadawood.com
@ConsultAyesha

the crafting or supporting ads/releases. At the same time, make sure your external ad/PR agency is fully compliant and aware of the laws relating to marketing compliance. M  ake sure all ad/PR releases are reviewed internally by internal counsel or external counsel before flighting or publication. This will ensure both a factual and legal review and minimise potential CPA claims as well as: M  inimise ASA review and potential penalties including take down/recall/ amend/make good notices and actions. C  ounter against trade mark infringement as legal review will ensure a trade mark scoping of existing marks both locally and globally. P  ropelling you to consider a domain registration for new companies, product phrases and trend phrases before a public marketing campaign. P  reventing false marking if an advert/ product imprints the word patent to an unpatentable or unpatented item. I  dentify any unauthorised use of persons or portraits that have been used without agreement or if by agreement propel the crafting/review of an endorsement agreement. P  recluding unfair comparative labelling and advertising which promote your product as superior to your competitor without any factual and objective basis.

It is recommended that an advertising control sheet be maintained. This will ensure a sense of control and accountability as all releases will be documented. This should contain a provision that all ads/materials be sent for legal review and if sent internally, for legal to confirm whether they have been reviewed or not. External legal reviews should be signed off by external counsel. The message is simple know your law relating to advertising and labelling, nationally as well as regionally it could save you endless headaches, unnecessary litigation and money. n

June/July 2013

BusinessBrief

MARKETING & SELLING

61

A new agency Model?

Over the past decade, the worlds of media and advertising have changed dramatically. Where brands and marketing managers were once the ones who decided what message they would communicate to the market, now their customers have a voice and theyre not afraid to use it.

his is a landscape shift that goes far beyond customers using social media to complain about and praise brands. It is an environment where consumers are deeply engaged with brands beyond the shop front and the product. For instance, customers expect to be able to influence how brands do business, which products they produce, even fundamentals like labour practices, through the voice that interactive social tools have given them. Thanks to mobile technology, customers expect to be able to do so 24 hours a day, seven days a week. Increasingly, they want informative, interactive content wherever they go and when it suits them their demand is to be listened to, informed, understood and entertained at their whim. This growing audience is more complex and fragmented than ever before, with niche, digitally connected audiences playing an active role in shaping the brands they love and hate. Applications and services that would never have been sustainable in the past are now viable products for niche markets. But to serve these niche markets, brands need to understand them intimately. For some brand managers and agencies coming from a background of traditional media, this digital environment is hard to grasp or pin down, as its moving very fast. No longer is the audience passively

sitting in front of a TV or radio it is consuming, creating, interacting with, and moving between different media in complex ways. Understanding this changing consumer demands a new approach from an agency with a digital heritage, who understands the digitally enabled consumer. Not in isolation, but working alongside other partners and experts. This model draws together professionals from a range of functions with a myriad of skills. It demands new ways of collaboration between brands and their various agency partners. The creative team is no longer made up only of a copywriter, an art director, reporting to a creative director. In addition to these roles, the agency/client partnership of the future will pull in experts in customer service, product/ service design, user experience, data mining, branding, reputation and more, to craft strategies that span channels and create an integrated platform for dialogue with customers. Consider, for example, how business solutions are starting to interact with marketing and media. Owned media such as websites and mobile apps are transactional platforms, as well as the marketing and communications spaces brands use to talk to their audiences. As another example, loyalty cards are tied into mobile apps and digital point-of-sales, bridging the gap between marketing, transaction and customer

relationship management. This is a world of building customer relations, and yes, marketing, for brands and agencies that understand it. What does this mean for you as a marketing director or a business owner? T  here are fantastic opportunities to create measured return on investment from digital, by mixing relevant strategic thinking with great ideas and great technology. T  hese opportunities span across both marketing and business solutions. T  o be successful, you will need a partner who can help you roll out viable integrated strategies for paid (advertising), earned (PR and social), and owned media (your own channels such as your Website and email marketing). Y  ou should take a holistic look at your through-the-line strategy, before you spend any money at all. This is a daunting, complicated and difficult landscape, but it is also one that is ripe with opportunities for brands that want to be genuinely connected and engaged with their customers. Today, with the right agency engagement, there is scope to listen, scale, change and evolve in response to customers driving profitable growth through customer acquisition and retention. n

By Pete Case Founder and CEO Gloo Digital Design pete@gloo.co.za

@glooniverse

BusinessBrief

June/July 2013

62

MARKETING & SELLING

THE POWER of EXHIBITION

The world of dcor, design and accompanying fads have never been as creative, liberal and exhilarating as today. It is magnificent to observe the metamorphosis of design and it is even more precious to see how creativity has started to bleed into all arenas that cater for sensory enjoyment.

t stands to reason that because people are saturated with content, ideas, possibilities and options that only the standout concept still bears consideration by consumers and customers. The days of dictating to the consumer have passed. The table has turned, and the consumer is very much dictating to us the creators about which experience they would like to have.

this form of promotion more readily and successfully achieved than in the exhibition hall. The power of exhibitions remains intact: It offers the visitor an incredible sensorial experience. For companies it is a fantastic networking vehicle, enabling them to eyeball their competition while serving a wide range of consumers. However, not disputing the success of exhibitions, it is important to appreciate that the format has changed dramatically. Gone are days you could guide a visitor along a corridor of vendors no, instead you need to show the visitor, allowing him/her to go wherever their senses guide them. Weve seen many exhibitions in recent times, and, it is unfortunate that most still follow the box standard formula. It is a sign of disrespect to visitors who are taking time out of their busy schedules in the hope to experience something amazing and it also indicates disrespect to the very company investing heavily in a stand at an exhibition. The future of exhibitions, therefore, is in the creative sphere. For the creative, the exhibition sphere offers an amazing opportunity to really experience products and services in a positive environment. The psychology informing exhibition spaces should never be underestimated it defies logic why so few exhibitions consider dcor, their particular audience or market when they present their space. The role the aesthetics of exhibitions play in achieving success for the merchant and satisfaction for the visitor should be appreciated. It is not an easy field although many would believe it to be but it is fantastically rewarding when a beautiful space attracts smiling appreciative visitors. n

The power of word-ofmouth trumps all forms of marketing

Spaces are granting visitors their wish for novel experiences. For example, there is Htel Droog in Amsterdam, which has opened a hospitality experience like no other. Accepting that visitors all seek different experiences, this hotel decided to cater for many in a fresh and inviting manner: it is one part gallery, hotel, restaurant, boutique store, salon, exhibition and lecture hall creating a holistic experience that is both beautiful and practical. Of course, the exhibition space is a fantastic example of creating an experiential arena at the order of the visitors wishes. People in the industry have always known that the under one roof experience will gather traction, but with a smorgasbord of offerings on so many platforms, those in the business of exhibitions have to be more original and enticing than ever. The power of word-of-mouth trumps all forms of marketing and nowhere is

By Nicola Hadfield CEO Nicola Hadfield Enterprises nicola@nicolahadfield.co.za

@aBeautifulDaySA

June/July 2013

BusinessBrief

MARKETING & SELLING

63

Too many cooks spoil a brand

Admin rights to a brands social media channels have been distributed like candy at a kids party to departments who may not have the specialist skills required to tackle such a unique brand engagement platform. The result? Mixed brand tones and language that confuses fans.
By Lisa Sharland Account Director Reputation Matters lisa@reputationmatters.co.za
@reputationiskey

Many industry leaders have warned about the consequences of deleting unfavourable comments made by fans on their wall but no best practice has been shared about how to tackle an undesirable admin post. Social media best practices are still debatable, but it is proposed to implement the same principals of deleting an admin post as when dealing with negative comments. Where possible, adverse admin posts should remain on a brands Facebook page if they have attracted comments by fans but may be defused with a strategic comment by the admin shedding light on the situation. Not all scenarios are the same and some may have to be rectified with a simple apology. Make it known that as a brand, you acknowledge the mistake and have learnt from it brands should never have opinions on topics that do not relate to them. Alternatively, if the post is identified quickly as off-brand and potentially risqu and no comments have been made as yet then delete, pronto! n

ocial media platforms are just that social. The users of these channels are looking for informative content that resonates with their lifestyles. A conversational tone that engages with its audience is one of the unique tactics needed to captivate an existing following and encourage further followers to join the network. Another problem to consider when too many people have been given admin rights to a brands social media networks is when posts are made which are off-brand, off strategy and irrelevant to their industry, which could have detrimental effects on a brands reputation. In this case, the post made may attract negative comments by fans questioning the brands motives for such a post, which could lead to a string of comments as long as a page. Does a brand then delete the post or is it best to leave it? At which point can a social media page be deleted, and when should it be left?

BusinessBrief

June/July 2013

64

HUMAN CAPITAL

PRESENTEEISM?
Isnt this a lovely word? It was used in a Harvard Business Review article in 2004, where it was described as the problem of workers being on the job butnot fully functioning. In this particular instance, it refers to employees coming to work when they are not well, and being really out of it and not terribly useful. It also refers to people putting in long hours when this is not necessary. t calls to mind the kind of presenteeism that many managers impose on their people requiring them to be in the office and do their time despite their being either not fully occupied or, even worse, their being unable to fulfil their work by being in the office. The most obvious case of presenteeism is when salespeople are required to be in the office or clock in and out even though the salesperson who is in the office can be regarded as temporarily unemployed! This seems to be most common when the pressure is on and backs are against the wall and the Sales Manager, in desperation to feel like he has some measure of control over things, decides that there

should be morning and afternoon action rooms. This is the kind of decision one would expect only under situations of high stress. High stress has the impact of shutting down the thinking part of the brain. As a result, the decisions made under high levels of stress make no sense when one is thinking clearly. This is one such decision. It does not make any sense and it just adds to the stress, because those very salespeople are feeling hamstrung by this over-control. Such over-control breeds resentment and disengagement. If salespeople are to be expected to pull out all the stops to generate sales when the pressure is on, then they need to be able to get out there and sell! In fact, when times are tough, they should be given a hard time when they are in the office. A second variation on presenteeism is similar to this. There are times in the life of the business executive when things can be very stressful. The business is going through some serious changes, the business environment is presenting you with real disruptors and game changers, and you feel as though you are under siege. Under such circumstances it may be quite natural to want to have your lieutenants around you close at hand. This way you can speak to them whenever you need or want to. You can call a quick war room meeting and decide on how you will respond to each new volley of shots.

You can take comfort from the idea that your troops are with you. It makes you feel better. But that is turning things on their heads and not in a good way. The role of the leader, when the team is under siege, is to provide a calming influence so that that they can think clearly. Demanding presenteeism ratchets up the stress and diminishes the quality of the thinking. It also makes people feel over-controlled and, therefore, out of control. They are prevented from doing the things that give them a sense of having some control going to see customers, spending time with their own teams, getting out of the office there they can think differently and more clearly. Leadership is never for sissies even more so when one is under siege. It is the most difficult time to be reflective and yet there is little that is more essential at such a time. It is under the greatest pressure that we need the greatest presence of mind to choose for ourselves the behaviours that will give us the outcomes that we seek. If you seek to create further stress and panic, then demand presenteeism. However, if you seek clarity of thought and a coherent response, presenteeism will just not do it. n By Belinda Davies Owner Leadership Solutions belinda@leadershipsolutions.co.za

If salespeople are expected to pull out all the stops to generate sales, then they need to be able to get out there and sell!

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Contact our specialist on 0860 27 86 83 or email hr1@aon.co.za, alternatively, SMS Employee to 31762 and we will call you back. For a group scheme that fits your employees perfectly.

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BusinessBrief

June/July 2013

66

HUMAN CAPITAL

LIMITING the RIGHT to STRIKE

The South African Constitution recognises the right to strike as an important bargaining tool.

t therefore comes as no surprise that a legal mechanism aimed at limiting the scope of this right has become highly contested. The proposed amendment to section 65 of the Labour Relations Act, No 66 of 1995 (LRA) has caused concern among trade unions. Currently, s65(1)(c) of the LRA holds that no person may take part in a strike or a lock-out if the issue in dispute is one that a party may refer to arbitration or to the Labour Court in terms of the LRA. The proposed amendment to s65(1)(c) seeks to further limit the right to strike or lock-out by excluding this right in circumstances where the issue in dispute is one that could be referred to arbitration or to the Labour Court in terms of the LRA, or in terms of any other employment law. Employment law is essentially a system of rules regulating one aspect of modern society, namely the workplace. The amendment to s65(1)(c) has far reaching implications and

primarily seeks to address the increasing levels of unprotected strikes (as well as violent strikes) by further proscribing the circumstances under which employees may strike. If a dispute is one that can be referred to arbitration or the Labour Court in terms of the LRA or any other employment law, then strike action taken on this basis will be unprotected. This means that the list of issues over which employees may no longer strike, or over which employers may no longer lockout, will be extended. As the law currently stands, employees are allowed to strike over claims of unfair discrimination because this type of employment law lives in the Employment Equity Act, No 55 of 1998 (EEA), and not the LRA. However, when the amendment is promulgated employees will no longer be able to do so because such matters can be referred to the Labour Court in terms of the EEA. The central reason for the proposed amendment is to emphasise and maintain the distinction between disputes that must be adjudicated in arbitrations or in the Labour Court, and those issues that are properly the realm of collective bargaining. The trade union Solidarity, expressed its views on the proposed amendment to s65 and its concern was obvious. The right to resort to strike action is an important tool for trade unions. Solidaritys resistance is to be expected. However, the true issue at play boils down to the reasonableness of the limitation on the right to strike. It remains to be settled whether the limitation on the right to strike under s65 of the LRA, together with the proposed amendments thereto, are really as unreasonable as they are made out to be. Furthermore, the proposed amendment will have the effect of decreasing the number of unprotected strikes and forcing employees and trade unions to establish a proper purpose for the strike, and to execute the strike as the last possible resort to resolving a dispute. n By Aadil Patel Director and National Practice Head Cliffe Dekker Hofmeyr aadil.patel@dlacdh.com By Katlego Letlonkane Candidate Attorney, Employment Cliffe Dekker Hofmeyr katlego.letlonkane@dlacdh.com
@DLACDH

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Pre-employment polygraphs
s commercial crime continues to rise, syndicates target businesses and applicants manipulate CVs and references, increasing numbers of employers are using polygraph testing to screen job applicants. Employers are now taking proactive rather than reactive routes. While, five years ago, just 10% of companies considered pre-employment polygraphs, now up to 60% are using this method to screen potential new employees. Prevention is easier and far cheaper than solving a problem further down the line. Although many employees in high risk industries are dismissed as a result of disciplinary action, most companies dont prosecute. This means they are not blacklisted and dont have criminal records, so any checks often come up blank. This is exacerbated by the fact that a very low percentage between six and 13% of criminal charges actually end in prosecution. Companies tend to believe that theft, fraud and corruption wont affect them. They need to realise that there is a great deal of organised crime out there and that they are being targeted. A workplace polygraph test is nothing like the controversial lie detector tests depicted in movies and on television crime channels. Instead, it is a sophisticated system that brings together a parcel of issues that not only include the graphs and charts produced by the computers to which candidates are connected but also a host of verbal and non-verbal communications. Polygraph tests dont just uncover major crimes. They often pick up drinking and drug related problems as well as petty offences. The most important thing to remember is that the ability to steal even a small item, if left unchecked, could lead to an employee committing more serious offences in the longer term. Pre-test interviews take around 40 minutes while the test itself takes a further hour. Polygraph tests are completely voluntary and an applicant must give written consent. Each candidate is prepared and shown how the polygraph equipment works, screened for health issues and told how to sit and how to answer questions in order to dispel nervousness. Questions are discussed upfront. Questions are prepared according to each companys needs. In fact, both employees and employers are beginning to see polygraphs as a normal part of the employment process. n By Reg Horne Managing Director Justicia reg@justicia.co.za
@justiciasa

BusinessBrief

June/July 2013

68

HUMAN CAPITAL

Death by PROBATION
Do small business owners understand what rights they have when dealing with errant employees within their probationary period? Or will most end up being held for ransom by their employees who understand the labour law better than they do?
By Allon Raiz CEO Raizcorp allonr@raizcorp.com ne naturally interprets the purposes of the probationary period as a time period that affords employers the opportunity to evaluate an employees performance before confirming an appointment. It is then natural to extrapolate out of this concept that the employer would easily be able to dismiss an employee who is on probation. Most entrepreneurs assume that the probationary employment period is basically a licence to dismiss the probationary employee on the basis of non-performance, misrepresentation of skills or cultural fit. Not so. In fact there is very little difference between the rights of an individual who is fully employed and one who is on probation. A case in point was an affiliate who recently fired a probationary employee for these very reasons, as well as excessive absenteeism. The employee had wreaked havoc on the business by missing deadlines, which resulted in the exasperated business owner summarily telling the employee to pack their bags and he considered the matter closed. A few months later, the owner was slapped with a secondment to the CCMA for unfair dismissal of the employee in question. Sadly, the employers actions were in direct contravention of South Africas labour laws. According to the law, the employer was required to undergo a series of HR-related measures before finally dismissing the employee, and none of these measures were taken. Due to the marginal profitability of the business, the CCMAs demands have resulted in two alternatives for the small business owner either he concedes and pays out the negotiated settlement fee or he is forced to retain the employee with back pay, yet both alternatives make the business unprofitable and unsustainable. The time spent at the CCMA defocused the entrepreneur resulting in further damage. The business closed and seven other jobs were lost. Another incident involves a small business owner who had employed a sales manager that was clandestinely operating a competing business by utilising the employers business as a feeding trough. The employee was undercutting his employers costs to secure contracts and tenders for his own business from his employers client base. These actions were discovered by the employer and the probationary employee was summarily dismissed. Again, the small business owner failed to complete the requisite steps in order to dismiss the individual legally leading the individual to take the employer to the CCMA for unfair dismissal. This was done despite the fact that the individual had effectlively been caught stealing from his employer and was within his probationary period. The employer was faced with the choice of spending a small fortune in legal and travelling costs to fight the case or paying the individual a slightly smaller sum and walking away. The employer made the payment and this outlay almost crippled his business. These stories have become all too familiar the small business owner who risks his livelihood due to a poor understanding and application of labour law feels wrong on so many levels. This has become a huge problem for small and medium-sized businesses. These businesses most often do not have the resources and skills required to navigate through tricky labourrelated issues such as a conflict in the probationary period of an employee. This leaves the small-business owner vulnerable to opportunists who know how to manipulate this loophole in the legal system to their advantage. The suggestion is not that the labour laws be amended to strip labour of its rights further, as this would leave big business open to abuse and exploit their workforces at will, which is why the current labour laws were developed. Neither is the suggestion that two separate sets of labour laws are adopted; one that would apply to big business and one that would apply to small business. This would open Pandoras box from an enforcement perspective. The suggestion is merely that the legislation around the probationary period be amended to be less onerous on the employer to prove the employees lack of performance and/or misrepresentation of skills. This would create a simple solution to a situation that has seen many small businesses being held ransom by errant employees and, ultimately, being destroyed by the legal costs and time required to fight these incidents. Running a small business is a tough and risky endeavour. We all know the statistics for survival of a small business. By re-thinking the labour laws probation clause we would reduce some of the risks inherent to being an entrepreneur, resulting in a higher survival rate and, consequently, a higher employment rate. Surely this is worthwhile consideration for our Government? n
@allonraiz

June/July 2013

BusinessBrief

INFORMATION TECHNOLOGY

69

Data SECURITY compliance

hile data volumes continue to grow, there is an ever increasing need to ensure companies are legally compliant with how they access, manage and protect Personally Identifiable Information (PII). IDCs Digital Universe in 2020 report reinforced this by stating that the protection of data is growing faster than the actual data universe itself, from less than a third in 2010 to more than 40% in 2020. Are South African businesses doing enough to ensure theyre compliant when it comes to data regulation? Particularly in light of the pending Protection of Personal Information act (POPI), which has put pressure on business leaders to pay closer attention to the importance and need for regulation adoption. The POPI act affects all parts of a business, but there are two particular areas that Small to Medium Enterprises (SMEs) should focus on. Firstly, organisations need to be legally compliant in the approach and frequency in which they collect, manage and destroy sensitive data, including customer, business associates and staff data. Secondly, organisations need to demonstrate the ability to securely control the data collection, management and storage process, particularly those who outsource data management to third parties. Though the act will not be passed for a few months, it will require complete compliance where PII is being used for operational purposes. Complacent SMEs who view themselves as agile

According to IBM, 2.5 quintillion bytes of data are born every day, and 90% of the worlds digital information was produced over the last two years. In an age where data is viewed as the new corporate capital, this statistic is an attractive one for businesses that have become reliant on data to drive competitive edge.
adapters to change, need to alter their last minute mindset, to focus on covering the necessary regulation bases. Some useful starting points include:  inpointing your position: POPI P requires each organisation to appoint a Privacy Officer who will be tasked with identifying where the business sits within the compliance lifecycle. This also includes keeping pace with regulation requirements, to ensure they are being met in line with the organisations compliance progress. While this is not restricted to a member of the IT department, its imperative that this person have first-rate knowledge of the business information systems and how they are managed.  rioritise: Focus on prioritising P regulation points according to the data security implications and the severity at which these will impact the day to day running of the business.  lan and prepare for change: P No employer is exempt from POPI. Inform and prepare all employees well in advance of the regulation roll-out. Support this by running change management sessions; enable employees the opportunity to recognise and address any problem areas, policies and/or practices that will need to be adapted. This will help to curb any disruption to employee productivity and business performance.  rotect your data: SMEs must P consider a multi-layer security strategy that duly protects PII and accounts for employee negligence. Sturdy endpoint protection policies supported by a strong secure access process can help to tackle security risks associated with BYOD, mobile and cloud. Advocating the use of One Time Passwords (OTP) and Two Factor Authentication (2FA) software, will assist in safeguarding data from external threats, when working remotely or via a mobile device. Smaller businesses may feel like POPI is just another regulation to add to the mountain of red tape that is doing business in South Africa. However, if we are to be taken seriously on the international stage, there is a need to operate in an environment that displays good governance. Data security legislation and regulation is an extension of this. n

By Carey van Vlaanderen CEO ESET Southern Africa carey@eset.co.za

@ESET_SA

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INFORMATION TECHNOLOGY

Actionable INSIGHT from DATA

n days gone by, business owners were able to determine and anticipate the behaviour and actions of their customers without the requirement for specialised technology. Not only was the data limited in terms of variety of content but the speed in which decisions were expected was days or even weeks and hence gut feel based decisions were acceptable and generally reliable. In todays market, there are massive volumes and variety of data being generated at an alarming speed. It is physiologically impossible for the human brain to process all the available information to find patterns and relationships. Coupled with the diverse nature of the available data, the speed in which business is expected to react and make decisions and the increasingly limited resources, gut feel based decisions are no longer acceptable. Today, the most competitive organisations globally use a combination of mathematical techniques and computing power to uncover vital intelligence that exists in the data. This unique combination of technologies empowers business to tap into the wealth of available data to make decisions based on what they know to be true rather than what they believe to be true. In essence, these advanced analytics technologies apply statistical, mathematical and machine learning algorithms to historical data to identify relationships and patterns that can then be used to anticipate and predict what is likely to happen next. The process is enriched through the use of substantial volumes of data that are collected, in real time from a variety of sources. Data relating to transactions, demographics, behaviour and attitudes are now incorporated in the decision process. It is the combination of advanced analytics

and this Big Data that facilitate this ideal partnership. Predictive Analytics and Big Data are most frequently applied to the area of customer insight and understanding. They offer the capability to understand each customer and to anticipate what they are likely to want and do next, thus enabling a highly personalized interaction between the organisation and customer at each touch point. It is these tailored interactions that are proving invaluable in gaining the competitive advantage. Predictive analytics has a compelling role to play in risk management and health care. A major healthcare insurer in South Africa uses big data and predictive analytics extensively to manage and optimise their management of clinical risk. Santam uses a combination of predictive models and business rules to target, in real time, how a claim should best be processed and its likelihood of being fraudulent. Predictive analytics can also be applied to operational processes. This includes making consistent and automated decisions in real time to process claims, optimise inventory of stock and detect when a part is likely to fail on a vital piece of equipment within a production line. Such insight eliminates costly downtime and unnecessary servicing, and ensures that the required spares are in stock. Data is the only representation of the truth; it is not open to corruption, political leanings or opinion, unlike gut feel. Can you afford not to use your data intelligently? What is the consequence to your organisation of making decisions the old way while others base their decisions on the facts? n By Dr Tracy Dunbar Director BITanium Analytics tracyd@bitanium.co.za

In a business environment where prices and products are so alike, a companys data and how it is used is one of the last remaining differentiators between mediocrity and excellence.

June/July 2013

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INFORMATION TECHNOLOGY

71

An effective online presence

In order to truly be successful, it is essential to develop a considerable online presence. You can enlist as many different digital tools as you like but without a comprehensive understanding of how digital platforms work as part of an integrated online strategy, they will do little for your overall business performance.
By Lucinda Boddy Managing Director Livewired PR Lucinda@livewired.co.za
@LuluGray

company website is the primary foundation for an online presence and as such this must be a valuable content platform that is professionally developed with the user in mind; the purpose of all other online tools is to attract users back to your website. This can be done in a number of different ways, one of which is to develop content for other websites that are directly related to your area of business and that the target market is likely to frequent. Articles produced should be interesting and at the same time full of strategic key words and phrases for search engine optimisation (SEO). The inclusion of backlinks to the website is another important factor to bear in mind. Additional ways to build online content include the use of online tools such as Google Alert, Tweet Deck, Social Mention and Trackur to name a few.

Position yourself as an industry expert by creating online profiles on sites such as LinkedIn, ensuring that when people google a particular industry or profession, your profile will appear. In order to further develop online standing, establish a presence on Twitter as well, regularly tweeting interesting information that relates to your field of expertise. Social media is one of the more complicated platforms to operate because it requires a comprehensive understanding of the target market and how those individuals interact with social media. Investigate sites such as Facebook, LinkedIn, Google, YouTube and Pinterest. While its a good idea to start familiarising yourself with these platforms, keep in mind that for a social media campaign to be truly effective, it requires a well-devised strategy based on the behavioural trends of the target market. Develop highly targeted promotional messaging through the implementation of email marketing to ensure an audience of potential clients rather than broadcasting promotional messaging to a large segment of the population, which may or may not be interested in your

business. Online advertising is another way to make sure that promotional material is viewed by individuals who have already taken an interest in the service you provide. Mobile marketing strategies are fast gaining traction within the industry. However, this too is a platform that requires in-depth research into the market in question as promotional messaging is sent out to targeted LSMs. In order to launch a mobile marketing campaign, start investigating the acquisition of location-based profiles such as Foursquare and Yelp. Then make sure that the ad content is well suited to the mobile format. Lastly, its important to develop some way of measuring the success of any online initiatives. Online tools like Google analytics and Spring Metrics help to ascertain whether or not marketing efforts are paying off. No matter your area of business, online strategy is vital to success. All online messaging must be consistent. Remember that anything you post online has the potential to affect your business either positively or negatively, so its important to monitor each platform closely and respond accordingly. n

BusinessBrief

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INFORMATION TECHNOLOGY

STEPS to IT GOVERNANCE

hile most organisations go to great lengths to comply with requirements related to corporate governance, the increasingly important area of IT basically remains overlooked. Perhaps it is largely due to the fact that most directors dont have the necessary knowledge, skills or experience to apply comprehensive oversight of this area of the business. Nevertheless, IT forms a significant part of a businesss core competency and any comprehensive corporate governance strategy focusing on maximising value for all stakeholders must include IT. The same rigours that are applied to other areas of corporate governance should also be applied to IT. A 12 step programme has been developed to help organisations address their IT governance requirements. These steps involve a detailed plan for IT governance that not only meets compliance requirements but predominantly focuses on maximisation of stakeholder value. Companies should begin by clearly defining their IT governance objectives within the organisations corporate governance strategy, and establishing appropriate structures (organisation and accountabilities, roles and responsibilities). These will mainly involve a board subcommittee, established on similar lines to the audit or risk committees, together with executive and management committees to supervise day to day IT activities. Following this, directors and executive management need to be carefully selected, based on

their previous exposure to IT, and appointed into the IT governance functions. Once these structures have been established and appointments made, the IT governance model and frameworks can be constructed. These are vital to the oversight of IT since they describe all the key components that ensure a holistic view of IT governance. Having established the components, they can be expanded into the domains, capability groups and capabilities that make up all world class IT organisations. At this stage, it is crucial that a significant number of awareness campaigns are conducted with all stakeholders to bring everyone to the same level of understanding and, most importantly, to encourage stakeholder by-in. Principles and value drivers need to be established for IT governance as a whole and also for all components of the IT governance model. It is these principles and value drivers that will provide directors with the direction needed to extract the maximum benefits from IT. With this in place the real IT governance work can start. At the outset there needs to be an accurate and honest assessment of the current maturity of the IT capabilities. Then a picture of the future can be painted, bearing in mind timeframes, costs, practical knowledge and experience. The next step is for companies to establish the priorities they want to pursue. Most gain or most pain is normally a good starting point. Armed with these priorities, the

organisation can plan, agree, develop and implement solutions to meet its corporate objectives. Progress must be tracked and monitored to measure benefits, and results should be reported in a transparent way. Ongoing assurance and reviews need to take place to inform improvements in the future. While these 12 steps can help organisations develop a complete IT governance plan, they will not be successful without the full support and commitment of the board of directors and executive management team. Knowledge about IT governance can be taught and learned but the determination to evaluate, direct and monitor cannot. Once a detailed IT governance implementation plan is established and communicated, directors must drive IT governance in the same way that they drive overall corporate governance. They must use whatever experience is available, internally and externally, to help them discharge their obligations. n

By Mike Jarvis CEO and Co-Founder OverSight Solutions mike.jarvis@oversightsolutions.com

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PROCESS & OPERATIONS

73

Attracting millennials
Supply chain management is not sexy, not to most young millennials anyway, who according to recent surveys, are choosing four to five other careers in business before they even consider a career in a supply chain vertical.

his is bad news for the profession, which depends on being agile and responsive traits that epitomise the present generation of young people who are entering the workforce. The supply chain management industry has seen quite a few rapid changes in recent years. Some people believe that redesigning a companys supply chain is the best approach, despite the substantial cost of such an exercise. However, the business environment changes so fast that by the time the ideal situation is planned and ready for execution by a workforce used to doing things the old way, things would have changed so much that it would have to be redesigned again! Futuristic and dynamic in their approach whilst delivering stakeholder value in the present, millennials are the future leaders of these complex, fast-changing supply chains. Smart, forward-thinking companies would do well to adopt best-fit strategies to attract, engage and retain, or risk losing these talented employees. Millennials, referring to the generation between the ages of 18 to 30, are a tech-savvy, social media-driven generation. Living in a diverse world and inspired by the Microsoft and Apple success stories, but disappointed by recent economic meltdowns, this generation is fiercely independent, sceptical and concerned with global sustainability issues. Supply chain management has only in recent years been given the prominence it deserves in terms of guiding organisations in redesigning for adaptation to a changing world. Gradually, we are beginning to see more

millennials pursuing careers in supply chain management as universities gear their courses towards the wide range of skills that are needed for these future professionals. However, due to a lack of understanding in how to approach this generation which is sufficiently different from Generations X and Y to warrant new methods to attract and retain them it is apparent that many companies have assisted millienials with their studies only to lose them in their first few years of employment. This effectively makes these organisations glorified finishing schools that groom graduates for other companies and industries. The context and maturity of the supply chain concerned informs the way in which a successful millennial-seducing strategy should be applied. Its often more difficult for companies with established processes to be flexible, but a thorough awareness of how millennials think and operate will assist them in adopting an effective approach. How do they think? More than money, millennials are motivated by a job that enables them to grow, experience new things and enjoy some flexibility to move around, especially if theyre performing well. Also, opening up effective two-way channels of communication is the best way both to benefit from the millennials fresh ideas, whilst giving them the comfort that theyre appreciated. Paying mere lip service to open door policies is the quickest way to lose a millennial. They desire to engage with senior management in a genuine way, not to be told thats not your responsibility, or, youre too inexperienced to make suggestions.

Taking the time to understand how to connect and then grooming and guiding them through their early careers, are the keys to wooing millennials and building a winning supply chain. n

By Liezl Smith President SAPICS Liezl@sapics.org.za

By Lungelo Khumalo Principal Practitioner Sasol Polymers lungelo.khumalo@gmail.com

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PROCESS & OPERATIONS

ACCESS CONTROL
Continuous research into and development of access control solutions means businesses can take advantage of a wider selection of low-cost technology. This technology is designed to offer complete security and empower decision makers with control over the environment.
engineered and designed to facilitate realtime communication, to automatically update systems and issue instant reports. For example, operations within the retail and manufacturing industries need robust infrastructure that can withstand heavy-duty conditions and high-impact use. The system should also correlate and support control mechanisms that may be in place, such as turnstiles, booms, booths, cctv and other forms of access control. Innovation and advances in technology enable companies to control access and time and attendance systems remotely. Whilst decision makers have a choice in what type of solutions to put in place, there can be no compromise on what the technology should do. Infrastructure must ensure accurate, timely reading of data and reporting functionality to the system, allowing decision makers to focus on core strategy instead of having to spend time on ensuring processes and procedures take place. There must be a level of control in place to combat issues such as buddy clocking, unauthorised access and time theft. According to the company, biometric solutions continue to gain popularity in the market, with fingerprint identification being the most prominent form of application and interface. At the same time there is growing interest in deeper levels of identification, including voice/ facial recognition (using identification of the iris, for example). Biometric technology is gaining popularity within the access control space because it is manageable, accurate, quick and cost-effective. As long as there are threats to businesses, be they internal or external, innovative time and attendance and access control hardware will remain relevant and the space competitive. n By Teryl Schroenn CEO Accsys tschroenn@accsys.co.za
@AccsysPeopleMan

ecision makers must consider which areas of the business requires protection and to what extent they should be protected.

Access control is not only about regulating who enters and exits the business premises, or managing where employees are at any given time it is also about monitoring who has access to a system: when, where and for what reason this access is used. High risk areas, such as data centres, corporate networks, stock rooms and administration systems, require specific attention in terms of access control. Once the core requirements have been identified, the next step is to identify what hardware would best suit the environment. Solutions available today are

June/July 2013

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PROCESS & OPERATIONS

75

ith globalisation and advances in technology, companies today are interconnected through their supply chains, which often extend across a number of continents. This opens up new opportunities, but it also means companies are vulnerable to changes taking place throughout the global marketplace. Successful businesses realise that the secret to competitiveness lies in their ability to continually innovate and partner with the right companies to respond effectively to volatile market conditions and mitigate risk. This is giving rise to the trend of forming smart partnerships with key suppliers and other supply chain

LINKING partnership
entities whereby both parties benefit from building a closer long-term strategic relationship that may or may not involve financial investment. Smart partnerships entail aspects such as setting mutual objectives, ensuring potential partners are financially sound and not likely to go out of business, and that they are committed to continuous innovation to enable them to produce better products and services. Smart strategies may also include ensuring potential partners are equipped to strategically source raw materials so that required resources do not run out. It may also be beneficial for both parties to use the same planning tools and other IT systems. Choose partners carefully and be prepared to share knowledge, ideas and strategies with them and not try to squeeze the maximum discount out of them. Sharing ideas and strategies may include aspects such as coming up with new ways to source products or introducing new methodologies or shipping methods that will benefit both parties. Mutually beneficial smart partnerships fast-track innovation by enabling businesses to leverage the expertise of other organisations and gain access to new products, insights and markets. n By Kate Stubbs Marketing Executive Barloworld Logistics kstubbs@bwlog.com

The benefits that accrue from dealing with Israeli companies are manifold. Israels technology in the areas of telecoms, internet, cyber security, electronics, security equipment and radio communications ranks among the highest performers internationally, as do their medical, pharmaceutical, agricultural and scientific advances. Israels intellectual capital is unrivaled.

Contact Details: South Africa Israel Chamber of Commerce vicky@saicc.co.za / +27 (0)11 483 2272 / www.saicc.co.za

BusinessBrief

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76

PROCESS & OPERATIONS

Adding performance to STRUCTURES

oo often in the construction industry (and other industries for that matter) the word performance is thrown around too loosely. The hope is that the uneducated beneficiary will accept the standard of construction as being one of a high standard. One could argue a case of performance-washing, in the same manner as the term green is often loosely used to describe a subject that complies with sustainability.

Similarly, a membrane that would prevent external moisture to penetrate the building envelope but still allow internal condensation to escape would possibly be a better material than a membrane that did not allow the condensation to escape. One should also note that the building materials industry is a global market and enjoys astronomical revenue on an annual basis. Where a material is considered a commodity item there will surely be opportunities for material manufacturers to take short cuts, often at the detriment of the materials performance. Understanding that not all materials perform as they make out to, the onus remains on the designer to stay abreast with the materials industry and constantly interface with those closest the material the manufacturer. Legislation will (and should) play a bigger role in maintaining regulation within the building materials industry. This will ensure that the manufacturers whose primary purpose is to create performance centric materials are considered more often than those who dont. Building materials have the ability to turn a good design into a great one. The technology that is available globally is one that is taking on board contemporary challenges in the construction industry and providing solutions for the designer and ultimately, the structures beneficiary. Closer inspection of building materials is much encouraged with the aim of incorporating purposeful function to the success of the design. Form follows function is a well-known term that should resonate with both the designer as much as the building material manufacturer if the principles that evoke performance are to be retained in modern day structures. n

The word performance is term that can be measured in varying degrees. From a business perspective, performance is deemed to be the fulfillment of an obligation, or the completing of a given task measured against known standards of accuracy, completeness, cost, and speed. Such reference to the term performance indicates that there is much purpose and function that the subject should perform, in order to be labeled in the category of a performance.

With this in mind, how can the building materials industry step up to be regarded as an industry that supports and encourages performance for construction? Performance in construction has its roots at the design level of the structure. It is really up to the designer to incorporate a method of design in line with the function of the desired structure. One should be careful not to simply rely on a material to perform the core performance function of a structure. A design centered with clear forethought and intention will highlight the performance of building materials, it would be presumptuous to think that the reversal would apply itself in the same way. If ones design could be highlighted with the addition of performance based building materials, it would make sense to educate oneself with what the materials industry has to offer. For instance, a material that prevents air-leakage would possibly be a better insulator than a material that would insulate but also allow for thermal bridging.

By Brendan Lowen Building Materials Specialist Advanced Building marketing@advanced-building.org

@AdvBuilding

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R995.00

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June/July 2013

BusinessBrief

SEMINARS & CONFERENCES

79

SEMINARS & CONFERENCES

Preparing for a SARS Audit 11 June 2013 (Durban) 13 June 2013 (Potchefstroom) Financial Due Diligence Masterclass 13 26 June 2013

CONTACT
Durban Country Club Willows Garden Hotel Nadia Du Plessis events@thesait.org.za Countrywide 011 662 2095 Nicolaas_van_Wyk@accountingacademy.co.za The Airport Grand Hotel, Boksburg Pietersburg Club, Polokwane 011 662 2095 Nicolaas_van_Wyk@accountingacademy.co.za Durban, KZN Lindi 021 827 1847 gary@biztrainer.co.za Midrand Pheasant Hill House Cape Town Best Western Cape suites 0861 11 61 21 delia@thecommunicationacademy.co.za Sandton Convention Centre 021 700 3558 annemarie.roodbol@clarionevents.com

DESCRIPTION
Every individual ought to know how to deal with a SARS audit. This practical workshop is aimed to equip you to do so. Understand and value transactions, improve negotiation skills and ensure that returns and rewards are greater than the risks and exposure. Knowledge of secretarial work will assist you in advising your clients on complying with statutory requirements of the new Companies Act 2008 and avoid prosecution. Many business owners struggle in understanding how to use the financial statements generated by their accountants, to make effective business decisions. Presentation skills, Public Speaking and Communication Workshop. You will be presented with a before and after speech recording to watch your improvements. The meeting and trading platform for everyone who is passionate about improving the standard of education in Africa.

Company Secretarial Work for Private Companies & Close Corporations 18 June 2013 (Boksburg) 21 June 2013 (Polokwane) Understanding financial statements and ratio analysis 19 - 20 June 2013 Confident Communications Workshop 19 20 June 2013 (Midrand) 7 8 August 2013 (Cape Town) African Education Week 19 22 June 2013

Corporate Governance, King III Report and Integrated Reporting Seminar 25 June 2013 17 September 2013 Delivering Exceptional Customer Service 10 - 11 July 2013

25th June 2013, Sandton Sun 17th September 2013, Sandton Sun Keith Heggie 011 880 4808 keith@frontfoot.co.za The Crowne Plaza Rosebank Hotel, Johannesburg 011 431 1533 info@kumalogreen.co.za Countrywide Keith Heggie 011 880 4808 keith@frontfoot.co.za The Johannesburg Corporate Conference Centre Edenvale Splendour Bontle Pule, 011 455 5184 splendour@melrosetraining.co.za Michelangelo Hotel, Sandton Debbie Atwell 083 651 1664 Debbie@knowres.co.za Erand Gardens, Midrand 011 805 3447 training@tippfocus.co.za Emerald Resort & Casino, Vanderbijlpark Lyn Jones lynj@continentaloutdoor.com 011 514 1610 Erand Gardens, Midrand 011 805 3447 training@tippfocus.co.za

Join Professor Mervyn King for a one-day seminar in which he will unpack everything you need to know to ensure good Corporate Governance in your business. Exceptional customer service is about so much more than a friendly voice. Its about commitment, attitude, knowing your business and understanding client needs. A full day webcast where you will be empowered with growth insights from worldrenowned leaders such as Condoleeza Rice, John C Maxwell, Jack Welch and others! This three day workshop provides the latest theory and practical experience needed to implement and perform a Reliability Centred Maintenance (RCM) analysis. Developing knowledge, competencies and skills of your leaders will improve performance, personal satisfaction and increased learning! Personal Excellence is for all persons involved in administration in commercial or non-commercial organisations. The course is an intensive three day workshop that will benefit anyone in the media and advertising field, media owners and marketers. The Emotional Intelligence Skills Program is intended to assist learners to take actionable, practical steps towards becoming a better person.

Chick-fil-A Leadercast 16 July 2013

Reliability Centered Maintenance 2013 17 19 July 2013

Leadership Development Conference 23 25 July 2013

Personal Effectiveness 29 30 July 2013

AMASAs 2013 Media Planning Workshop 1 4 August 2013

Emotional Intelligence 21 23 August 2013

80

As a service to our readers, we have listed this issues contributors, together with their contact details. Should you require more information or consultation on these topics, please contact the company or firm concerned.

MANAGEMENT

Central University of Technology ContinuitySA Consulting Engineers South Africa EOH QlikView SA Relationship Audits and Management

051 011 011 011 086 021

507 554 463 607 175 439

3911 8000 2022 8100 4589 5252

www.cut.ac.za www.continuitysa.co.za www.cesa.co.za www.eoh.co.za www.qlikview.co.za www.relationshipaudits.com

LEGAL

Adams & Adams Garlicke & Bousfield Norton Rose Shepstone & Wylie Attorneys Spoor & Fisher

012 031 011 011 012

432 570 685 290 676

6000 5300 8500 2540 1111

www.adamsadams.com www.gb.co.za www.nortonrose.co.za www.wylie.co.za www.spoor.com

TAX

Deloitte Edward Nathan Sonnenbergs Garlicke & Bousfield Mazars

011 011 031 011

806 269 570 547

5000 7600 5300 4000

www.deloitte.com/za www.ens.co.za www.gb.co.za www.mazars.co.za

FINANCE & EQUITY

Bowman Gilfillan Deloitte Experian South Africa Tenant Profile Network

011 011 011 086

669 806 799 187

9000 5000 3400 6000

www.bowman.co.za www.deloitte.com/za www.experian.co.za www.tpn.co.za

ASSETS & INVESTMENTS

Ernst & Young GT247.com Marriot Asset Management

011 772 3000 087 940 6077 031 765 0700

www.ey.com www.gt247.com www.marriott.co.za

BANKING & INSURANCE

Cleardata Lion of Africa Insurance MUA Insurance Acceptances PwC

086 011 021 011

122 100 525 797

5327 1900 6200 4000

www.cleardata.co.za www.lionsure.com www.mua.co.za www.pwc.co.za

MARKETING & SELLING

Ayesha Dawood Attorneys Gloo Digital Design Nicola Hadfield Enterprises Reputation Matters

011 021 021 021

486 443 823 790

7200 2260 2441 0208

ayeshadawood.com www.gloo.co.za www.nicolahadfield.co.za www.reputationmatters.co.za

HUMAN CAPITAL

Cliffe Dekker Hofmeyr Justicia Leadership Solutions Raizcorp

011 031 031 011

562 308 266 566

1000 0500 2705 2000

www.cliffedekkerhofmeyr.com www.justicia.co.za www.leadershipsolutions.co.za www.raizcorp.com

IT

BITanium Analytics ESET Southern Africa Livewired PR OverSight Solutions

011 021 086 011

234 659 154 656

3991 2000 8394 3197

www.bitanium.co.za www.eset.co.za www.livewired.co.za www.oversightsolutions.com

PROCESS & OPERATIONS

Accsys Advanced Building Barloworld Logistics Sasol Polymers SAPICS

011 011 011 011 011

719 447 445 790 023

8000 4478 1600 1111 6701

www.accsys.co.za www.advanced-building.org www.barloworld-logistics.com www.sasol.com www.sapics.org

PERF R MANCE
Its what CGMA stands for.
Officially, of course, its Chartered Global Management Accountant. A new designation representing accomplished professionals that drive and deliver business success, worldwide. Visit cimaglobal.com/cgma, email Johannesburg@cimaglobal.com call 0861 CIMA SA or (011) 788 8723 Find out more at cgma.org

Impresses the unimpressible.

The new, impossible to ignore Mercedes-Benz E-Class.
The impressive new E-Class combines redesigned looks with class-leading innovative technology, including DISTRONIC PLUS with Steering Assist, helping you maintain your following distance while keeping you right in the centre of your lane. For more information visit www.mercedes-benz.co.za/e-class
Vehicle specifications may vary for the South African market.

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